Preamble

The House met at Eleven o'clock

PRAYERS

[Mr. SPEAKER in the Chair]

CONFERENCE ON ELECTORAL LAW

Mr. Speaker: I have a further change to announce in the composition of my Conference on Electoral Law.
The right hon. Member for Leeds, West (Mr. C. Pannell) has accepted my invitation to serve on it in place of the hon. and learned Member for Dulwich (Mr. S. C. Silkin).

Orders of the Day — POST OFFICE (BORROWING POWERS) BILL

Order for Second Reading read.

11.5 a.m.

The Postmaster-General (Mr. Edward Short): I beg to move, That the Bill be now read a Second time.
This is not a novel Bill. Similar ones have been considered by the House in the past. Hon. Members will probably not expect me, or wish me, to spend very much time on a technical explanation of the Bill. I feel that they would be much more interested in hearing why we need the money and, in broad terms, how we propose to spend it.
First, dealing with the Bill itself, the limit on Post Office borrowing is fixed in terms of the total accumulated debt to the Exchequer which may be outstanding at any one time. The present limit—that is, the upper limit prescribed by the Post Office (Borrowing Powers) Act, 1964, subject to a Resolution of the House which was taken on 4th March last—is £1,320 million. I expect that we shall reach this limit some time next summer. Hence the need for the Bill.
The Bill proposes that the current limit should be extended in the first instance to £1,760, million. It also makes provision for further extension by Resolution of the House to £2,200 million. So

far as we can see, the first of these limits would meet our borrowing needs up to about the middle of 1969, and the upper limit, if it is needed—it almost certainly will be—will last us some time into 1971.
Hon. Members may be wondering why we are providing for our borrowing needs up to 1971 when I announced in the House on 3rd August last that the Post Office was becoming a public corporation within three or four years. The answer is that since Parliament has yet to approve this change in status I did not feel that I should be justified at this time in not providing for our needs for the normal period in Bills of this kind.
The Bill does not, of course, give the whole picture. As hon. Members know, the Post Office borrows only about half of the capital it needs. The rest is self-generated, and the other element is composed of the profit that we make plus depreciation. In fact, total investment during the next four years is likely to be about £1,500 million, whereas the proposed figures in our borrowing limits amount to about £880 million.
There is, however, one unusual feature about the Bill. I refer to Clause 2. In this respect, it is novel. Money received by a bank on current account is not legally held on trust for the customer; it is borrowed by the bank subject to being repaid in accordance with the customer's orders from time to time. Similarly, money deposited in giro accounts technically will be borrowed from the account holders. I expect the giro service to start next year. My borrowing powers will still be governed by Section 10(1) of the Post Office Act, 1961.
That Section authorises me to borrow from only two sources—the Treasury or the Bank of England—and so it could be held to prevent me from operating the giro service. Clause 2 is intended to remove any doubts that there may be on this score, and I am sure that it will have the support of the House.
I should like to say something about the developments in the two sides of our business—the postal and the telecommunications sides. I begin with the postal side. First of all, I have a brief word about Christmas mail. During Christmas and the New Year we handled


more than 1,100 million items. This very heavy load meant long hours for our staff, who were assisted by about 170,000 helpers from outside to get the cards, letters and parcels delivered before Christmas day. The public, too, responded enormously by posting in good time and bundling their letters as we asked.
I should say a special word of thanks to the staff, both permanent staff and outside helpers, and to the public for the invaluable contribution they made to the success of this operation. I would also thank so many hon. Members who visited their local sorting offices, which was a great encouragement to Post Office workers throughout the country.
I get complaints from time to time from both sides of the House about instances of poor postal services. Most of these are due to staffing problems which, unfortunately, tend to beset an activity like the postal service, which is highly labour intensive. Deliveries in expanding areas and the increasing amount of mail call for more manpower each year and it simply has not been possible everywhere to keep the recruitment in pace with the demand. But in recent months there are indications that staffing is becoming easier. As a result, we have been able to improve our performance to the extent that the letter service is now rather better than it was a year ago.
On average, as I told the House a few weeks ago, about 83 per cent. of fully paid letters are delivered not later than the day after posting. This achievement is the more remarkable when one considers that not all letters can be delivered the next day. I do not believe that any other postal administration in the world has a record as good as this.
Even so, I do not wish hon. Members to think that I am satisfied. There are many sectors of the service about which I am not satisfied, just as the Post Office is not satisfied and the workers themselves are not. We mean to go on with our efforts to improve the reliability and speed of the letter post. We are pressing on with our study of the possibility of a two-tier letter service, under which the charges to customers will be based on the speed of service required rather than the contents of the envelope. I am sure that, in this day and age, we can no

longer justify a reduced charge simply because a package contains printed matter. Indeed, these packages are very often much bigger than the fully paid ones and give much more work to the Post Office.
We are constantly striving to make the best possible use of manpower and to reduce costs. In an undertaking as big as the Post Office, there is always room somewhere in the organisation for improvement. We are taking a long and searching look at what might be done in this way, carrying out a work study in great depth both at the counters and in the sorting offices. To help with our efforts, we have had Messrs. McKinsey and Co., the management consultants, working with us for the past 18 months or so and it will be with us until 31st March this year.
Nothing so far-reaching as the studies on which it is currently engaged has previously been attempted in the Post Office. These amount to a fundamental investigation into ways of raising the productivity and profitability of the mail and counter services. We are also now reexamining the criteria on which we measure productivity in both sides of our business. All this is already bearing fruit and it will, I am sure, have a significant and lasting effect on the efficiency and economy of the postal service. I want to pay tribute to the co-operation we have received from the staff associations in these efforts to improve our efficiency and productivity.
As part of our drive towards cost reduction, we are adjusting some deliveries and collections. We are also, as my predecessor announced last year, shortening a little the hours for which Post Office counters are open. We are working towards a 5.30 p.m. closing time Monday to Friday and 4.30 p.m. on Saturday. These new hours will not only help to reduce cost. They will, I hope, make conditions a little better for the P. & T.O. grade in the Post Office on whose splendid work so much depends. This, in turn, should help with our recruitment problem, particularly in London—where it is very bad—and in other large towns.
Another highly important part of our attack on costs lies in mechanisation coupled with the provision of up-to-date buildings in which we shall be able to instal the new machines now coming


along. We now have the finest parcel-sorting machinery there is. We have made a start on introducing a system for coding the addresses on mail and sorting letter automatically. This system is undoubtedly the most comprehensive coding system in the world.
During the next ten years, we intend to spend over £45 million on sorting office machinery of one kind or another and research and development into new techniques. More than half the investment will go on letter coding and automatic letter-sorting machines. Public address codes of the type I recently announced for Croydon will be introduced in 17 more big towns this year and by 1970 about 60 of the largest provincial towns and the whole of London will be covered.
I know very well, of course, that the success of this plan for the use of postal address codes will depend very much on the co-operation we get from our customers. We also know that, the better the services we give, the higher the degree of co-operation we will get. On this, we can take some heart from a wide ranging survey of business and residential opinion of the letter service which was completed last year. The survey showed that, on the whole, people were reasonably satisfied with the service they were getting. We aim, as I have said, to do even better and to give our customers the best possible value for money.
Having said this and paid tribute to the Post Office workers who, in my view, do a very good job, I admit that there are here and there in the postal service black spots. These are due, in the main, to labour shortages. But there are now real indications that the Government's redeployment policy is having an effect on the problem and will improve the situation considerably.
In investment terms, however, the postal services are over-shadowed by telecommunications. This is a rapidly expanding business dominated by the inland telephone service. Our Report and Accounts for 1965–66 reported a record expansion in the number of telephones connected and in the number of calls handled. Demand is still very high indeed but, following the economy measures announced last July by my right hon. Friend, the growth rate is now slightly lower than we had previously budgeted

for. Even so, we still expect to handle about 10 per cent. more trunk calls this year than in 1965–66. We also expect to connect about as many or may be slightly fewer subscribers than last year, for which the total of over 800,000 was about 100,000 more than in any previous year.
We are not cutting back our investment in the plant needed for the longer-term growth of the system, which has tended to be insufficiently provided for in the past. For example, we are pressing ahead with the extension of the cable and micro-wave radio networks. The latest technological developments are being exploited, including the system known as pulse code modulation, which can considerably increase the capacity of lines in short-distance routes between telephone exchanges. We are also concentrating on our primary objectives of improving the service for our present customers.
As regards telephone exchange equipment itself, our expenditure is expected to be about £65 million, almost half as much again as in 1965–66. Next year, it will be about twice as much, and in 1968–69 is likely to be nearly three times as much as in 1965–66. This tremendous expansion is needed not only to cater for the demands for connection to the service and the growing number of calls. It is neeeded also to make good current shortages, to pursue the programme for converting virtually all exchanges to automatic service and subscriber trunk dialling for most subscribers by 1970 and to increase the rate of replacement of old equipment.
Much of this new equipment, unfortunately, will necessarly be of the standard electro-mechanical Strowger type. It is very unfortunate that, at this time of our greatest demand, we are having to take from industry equipment which is reaching the stage of obsolescence, but we have no choice in the matter. It takes some years for industry to change from one kind to another, but at the moment we are having to take a very large amount of this older equipment.
However, some will be cross bar—another electro-mechanical type—but an increasing amount will be electronic. I am glad to tell the House that the progress with the development of electronic exchanges is very encouraging, indeed. I


am sure that the hon. Member for Totnes (Mr. Mawby), who did some of the initial work on this, will be pleased to hear that.
After successful public service trials at Leamington and Peterborough of equipment suitable for exchanges up to about 2,000 lines, we have decided to order electronic equipment for all new exchanges in the appropriate size range. This has meant that this country was first in the field with full-scale commercial production of small and medium-sized electronic exchanges. Only a few weeks ago, I opened the first of these exchanges at Ambergate, in Derbyshire. Meanwhile, development has been going ahead with electronic equipment designed for larger exchanges and for the extension and replacement of electro-mechanical equipment in existing exchanges. This is now well advanced and public service trials will begin shortly in London.
The development of the ordinary telephone service is, of course, far from being our only concern in telecommunications. Elsewhere we are pressing on, too, with the expansion of the telex service, with data transmission and with the development of new facilities such as loud speaking telephones. We are conducting market research over as wide a field as possible of future requirements. These include electricity and gas meter reading, the transmission of fire and burglar alarms over exchange lines, answering and message handling facilities when people called are absent, and a viewphone which will incorporate speech and vision on one piece of equipment.
At the moment, we are also carrying out a costing exercise in a new town for a comprehensive cable which will carry telephone, television, sound radio, the reading of electricity meters, and so on. We hope to be able to evaluate this in a very short time and then to carry out a field experiment on it. Attention is also being given to improving engineering works practices, computerisation and organisation and method studies over a wide variety of fields.
In the international service, too, we are planning to provide for substantial growth. Indeed, traffic on the overseas telephone and telegraph services is ex-

panding at somewhere between 15 and 20 per cent. each year. The great strides which have been made in this sector are probably best illustrated by the developments in satellite communications. The Early Bird satellite, launched over the Atlantic in April, 1965, is now regularly carrying telephone traffic and television programmes between this country, Europe and North America. When Mrs. Brown, in Bradford, telephones her married daughter in Boston, in America, her voice may well be beamed 50,000 miles through space before it reaches the other end.
This only the beginning. As the House will know, another communications satellite was successfully placed over the Pacific only last week. Soon there will be global coverage and the countries of the world will be linked by a communications system undreamt of not so very long ago when the submarine cable was generally thought to be the ultimate in inter-continental communications.
All this, of course, is germane to the Bill before the House. Even though the project for a global communications satellite system is an international cooperative venture, it still costs a good deal of money and we are, of course, very active partners in it.
I know that a number of hon. Members are interested in the European side of this problem. Studies in the European Conference on Satellite Communications are only in the preliminary stage and it is too early yet to say what the outcome will be. In collaboration with European Governments, the Government are giving their support to a preliminary design and programme study by E.S.R.O. for a project of a European experimental communications satellite.
The Post Office is in constant consultation with industry in this country about the development of satellite communications and the activities of the Interim Communications Satellite Committee. Orders worth about £250,000 have already been placed with British industry during the first year by this body. The Interim Communications Satellite Agreement provides for a fair tendering system and, where other things are equal, for the distribution of orders among the participants in proportion to their shares in the system. It is also planned to build a second station at


Goonhilly and to equip the first in readiness for the tasks which will be faced with the global satellite system in 1968. Tenders for this early work have already been received and are now under consideration.
The attention being given to computerisation is reflected in the substantial order which we recently placed with English Electric Leo Marconi, which includes two computers for the National Giro Centre, at Bootle. I am glad to be able to tell the House that progress is going extremely well on the plans for the giro service which the House welcomed in principle in July, 1965. The brochure in which we announced our detailed facilities last summer has been very well received. I think that I can safely claim that our system will be more flexible than any existing system and that the installation, which will include one of the largest commercial computer centres in Europe, is probably the most advanced of its kind in the world. We expect to open the service, as planned. towards the end of next year.
In summary, then, the aim of the Bill is to enable us to provide for our rapidly growing number of customers services which, we hope, will increase in both quality and reliability. This is singularly appropriate in this Quality and Reliability Year. But it can be done only by increasing the amount of capital invested in the various services and the Bill is designed to enable us to borrow such capital as we need for this which we cannot generate ourselves.
I hope that this broad survey of our problems, our achievements and our plans will help to put the Bill into perspective and to show that the additional capital expenditure which it will permit will be a worthwhile investment for the country to whose economic wellbeing modern and efficient communications links are vital.
My hon. Friend will be very happy later in the debate to answer any specific points which hon. Members may wish to put. I accordingly trust that the Bill will commend itself to the House.

11.27 a.m.

Mr. Paul Bryan: I start by endorsing the thanks and appreciation which the Postmaster-General has expressed to the Post Office workers for their work at the Christmas period. All

of us who went round post offices at that time were extremely impressed and gratified by what we saw. I should like to thank the Postmaster-General for using the Second Reading of the Bill as an opportunity to tell us something of the progress of the Post Office.
Looking back, I see that we have not had a Post Office debate since July, 1965. I hope that the right hon. Gentleman will be able to use his influence with the Leader of the House to be able to do better than this over the months ahead, because ahead of us there are very important months. Everyone will agree that for the Post Office this is a key year. It is certainly a turning point in its history. For years opinion on both sides of the House has gone towards reorganisation of the Post Office on the lines of the right hon. Gentleman's statement on 3rd August. This is the year in which the big decisions are being taken, not just the general big decision of principle, which it is fairly easy to take, but the big decisions of detail, of organisation, of management, of accountability and so on.
In a reform of this sort, which I think the Postmaster-General would agree, is largely non-party, I hope that he will have the courtesy to bring the Opposition into discussions as much as possible, and as early as possible. Without trying to make a party point, we have had a lesson in the White Paper on broadcasting, when we waited for months and at last received a very damp squib, acutely embarrassing the Postmaster-General. There was nothing very much there. In retrospect it would have been better if we had been kept up to date with the news and discussed matters as they went along.
In this case, rather than have a lack of information from now until March it would be helpful if the Postmaster-General could find opportunities to inform us in detail, as early as possible about events. Paragraph 13 of the Post Office Report and Accounts says:
The year was one of intensive self-examination in the Post Office,
This is clearly so. It has been going on in many areas and we would like to know more about the results of this self-examination. For instance, it says in paragraph 17:
Various firms of consultants are at work tackling difficult areas of study.


The Postmaster has said a little about McKinseys, but he has not yet told us the results of any of its investigations. They have been there for two years and, although we shall never see the full report, I should have thought that by now they must have reached a variety of conclusions. Whether or not these are accepted, they would be interesting to Members for discussion.
Paragraph 14 says:
An economic Development Committee was set up to review the development of the services within the context of the National Plan
Unfortunately, the context has disappeared, as the National Plan is pretty well sunk. Nevertheless, presumably before that happened the Economic Development Committee must have reached some conclusions and I would be interested to know what they were. Most important of all, the House of Commons Select Committee on Nationalised Industries has almost finished its work on the Post Office. I would like to know from the Postmaster-General or his Assistant when we can expect the report. Will we see it at the same time as him, or will we get a preview.
It would be most helpful if we could see it before the White Paper comes out. I wonder whether the Postmaster-General can tell us anything about the Post Office Little Neddy. Has he any news on this? Paragraph 92 of the Post Office Accounts says there has been a survey of public opinion on the future of the mail services.
That started some time ago and perhaps we could hear about that. In sum, perhaps by design, there has never been a year when more information has been available and more investigation has taken place about the Post Office. So far we have not had the benefit of it, but I hope that we shall have over the next few months.

Mr. Harry Randall: I noted that when the hon. Gentleman referred to the Select Committee on Nationalised Industries, he suggested that the Postmaster-General or his Assistant might indicate when the report would be available. Surely this is not a matter for either my right hon. or hon. Friend. The report will be made to the House at the appropriate time, when it is completed.

Mr. Bryan: Indeed, but I should be very surprised if the Postmaster-General had not the slightest idea when the report was coming out. I should imagine that he will rely considerably upon its findings.

Mr. Edward Short: The hon. Gentleman will recall that, on 3rd August, I undertook that we would not bring out our White Paper on reorganisation and change of status until we had seen a report of the Select Committee on Nationalised Industries.

Mr. Bryan: In the statement in August, the right hon. Gentleman, with engaging frankness, said that as a result of reorganisation the Post Office would no longer be tied to the Parliamentary apron-strings. The immediate reaction of the right hon. Member for Easington (Mr. Shinwell) was to protest that Members would in future be denied the right of questioning. That was the instinctive cry of a sound House of Commons man, and I agree with him in that I am sorry that the Postmaster-General will no longer be questioned in the House. It is good for the right hon. Gentleman and his staff to be so questioned. I would only be willing to surrender that right as the price that we have to pay for superior organisation.
What worries me more is that the Postmaster-General's comment about no more apron strings was an instinctive cry of relief by an instinctive monopolist, who does not want interference. In any trading organisation, if it is to be efficient, discipline has to come from somewhere. So far the discipline, if one likes to call it that, within the Post Office, has come through Parliamentary scrutiny. It should either come that way or it should come, as it does in private enterprise, through competition. The discipline of competition is what keeps a business efficient.
Fortunately, nearly all of the other nationalised industries have to submit to the discipline of some competition. Even in the fuel and power industries they are competing against one another, and oil. The airlines are competing against foreign airlines, but the Post Office will be unique in having no competition of any sort. Since it will have no discipline from Parliament, or any competition, we have to underline again the tendency that is supposed already to


be there, of running it on as commercial a basis as possible. I express the fear that this may not happen, because so far the Postmaster-General has tended, when possible, to opt out of commercial discipline and also, without being nasty about it, he appears to have a certain personal antipathy towards commercialism generally.
Over the last year in industry and commerce, the most disagreeable discipline has been the prices and incomes policy. There the Post Office was uniquely allowed to opt out of this discipline and to put up its prices. Had any other industry gone to Mr. Aubrey Jones and said, "Look, we have to make 8 per cent. and therefore we must raise our prices", we know what the reply would have been. But the Post Office was allowed to get away with it. Secondly, in commerce, we have to pay the market price for management. Mr. Wall's is a highly suitable appointment and I have nothing but praise for it, in itself. However, I do not see the equity in the Post Office paying £12,500 and someone else paying the rest. I cannot see any other business enjoying this sort of luxury, apart from the impropriety of getting the balance paid by one of the suppliers of the Post Office. I do not for a moment wish to imply any dishonesty. But it just seems to be improper.
As to the Postmaster-General's personal antipathy towards commercialism I recall again the broadcasting White Paper and the experiment in local radio. I have not yet met anyone who can possibly imagine how local radio will be financed from the organisations suggested, most of them doubtful money-raisers on their own account. One comes to the conclusion that it is to salve his conscience that he moved away from commercialism to start with, knowing that he would have to resort to the filthy lucre of commercial advertisements in the end.
I acknowledge that the Post Office cannot be entirely commercial. It has big social obligations. But it is important that under the new set-up the accounts, however presented, should be very carefully analysed and that the social obligation should be isolated so that we know exactly what we are paying for social reasons and what for commercial reasons.
I have spoken about the information that hon. Members would like. I wonder whether the public could not have more information from the Post Office. Since I have been Parliamentarily interested in the subject I have had the greatest difficulty in coming to a conclusion as to the real quality of the Post Office services, including the telephone service. I do not think that anybody would deny that there appears to be a widespread feeling that the services are worsening. If one collected 20 people together and asked them whether the Post Office services had become worse in the last five years, and the same about the telephone service, a majority would say that they had. On the other hand, the Post Office often produces figures which disprove this. The Sun investigation was obviously completely incorrect, and the Post Office was able to put a convincing case against it. The Post Office Report also gives some figures which are satisfactory. I come to the conclusion out of all this that it is patchy.
That being so, it seems to me demoralising for the staff of the Post Office in areas where the service is good to come under the—"condemnation" may be too strong a word—cloud of general condemnation, which they may not deserve. I wonder whether it would be possible for the Postmaster-General, instead of waiting for a complaint and then publishing the answer, from time to time to publish positively local results of the postal service. Last week I was talking to the telephone manager in York and he showed me a book of statistics. I understand that it is not for general publication, but it is full of very interesting information to me. So these are already collected and available. I wanted to see what the telephone service was like in York. It looked good in respect of the time one had to wait to get a call. It seems to me that once a month or a quarter people would be interested to read in their local newspaper how their service compared with others. If they saw that their service was bad, it would concentrate attention on it. It would do the staff, the Post Office and the public nothing but good to know exactly what the service was like.
Sometimes one finds the general statement that 90-plus per cent. of postings


are delivered the next day. That is not believed by people whose experience is different. I wonder whether under the Post Office Users' Council, an independent body of which we do not hear very much yet, an efficiency index could be published from quarter to quarter. People would be far more likely to believe something like this as they believe in the cost-of-living index; everybody knows what that is about and believes it. I should have thought that a report of an independent nature like that would be of interest to the public.
The Postmaster-General mentioned the shortages of manpower, especially in London and the Midlands. I wonder whether the Assistant Postmaster-General could give us more details. Last November there was an estimated shortage of 1,200 postmen in London on an establishment of 20,000. I believe that there is a shortage of 400 counter officials. Is the position still the same? Has the squeeze made a difference? Has redeployment in factories brought anyone into the Post Office? Is there any progress in that direction? Perhaps we could have a little more information about these areas. What has happened in the Midlands, which suffers almost as much?
There must be serious personnel problems ahead for the Post Office. I was glad to hear that the consultations on the McKinsey proposed reforms appear to be going smoothly, and that the staff are being brought into the matter. Can the Assistant Postmaster-General say anything about the worries of the staff with regard to their Civil Service status when the change-over comes?
As to mechanisation, we were very interested to hear what the Postmaster-General had to say in particular about coding. My only question is whether we can be told a little more about its effect on the customer. Nearly every mechanisation or computerisation—this is particularly so for those of us who have suffered it in regard to our bank accounts —seems not to do the customer any good. It is less convenient rather than more convenient. What does this mean to the user of the Post Office in terms of addressing? Will it speed up the service? It will obviously make it cheaper. Will it make it more efficient? Will there be fewer mistakes?
I should like to know about the telephone service waiting list. I see from the statement of accounts that it stood at 96,000. I expect the Postmaster-General has received other figures since then. We should all be interested to know the figure at which it stands now, and also what effect this year's rent in advance is having, whether it is stopping the rise in the graph, what the effect of the credit squeeze is, and so on. In Particular, we should like to know how many of the 96,000 have been waiting more than a month, more than six months, and so on.
With regard to electronic exchanges, I was very interested to hear what the Postmaster-General had to say. One thing that he said was that it was disappointing that it was still necessary to order obsolete equipment. I quite understand that. I should like to know what proportion of new orders is for electronic exchanges. Can he give us some picture of what the situation will be like 20 years hence?
I was looking round the beginnings of the exchange at Pocklington the other day and was surprised to learn that the time between the first brick being put down and an exchange coming into operation is about two years. I am a layman in mechanical matters, but that seemed a long time to me. Could we be given some comment about delay and the time that it takes to build an electronic exchange?
I think that I have given the Assistant Postmaster-General enough material in my questions. I have not said anything about the gyro. We have expressed ourselves in favour of this in the past. Several of my hon. Friends will talk about it, particularly my hon. Friend the Member for Moray and Nairn (Mr. G. Campbell). I look forward very much to hearing the replies of the Assistant Postmaster-General.

11.48 a.m.

Mr. R. F. H. Dobson: I am exceedingly glad to be able to participate in this debate. As the hon. Member for Howden (Mr. Bryan) said, this is the first debate on the Post Office for a long time. It is the first since I became a Member of Parliament. Before I came here I served for close on 20 years in the Post Office.
I should like, without being too presumptious, to begin by congratulating the Postmaster-General on two or three things. I do so first on his speech, which was very interesting. He had to talk about rather mundane affairs, the day-to-day work that the Department has to do, and so on, but he also gave us an insight into something of a very exciting nature.
I join with the hon. Member for Howden in his defence of Post Office staff. The hon. Gentleman was right when he says that if one is in a section of industry that is under attack one feels very badly. One knows that comments are directed as a spray against the whole machinery of the Post Office, but the offence, if that is the right word, may be in a very restricted sector and may itself be very restricted.
Those of us who worked in the industry for many years knew that there were some basic reasons for the deficiencies. We knew that the cause was staff shortages, equipment failures, sometimes bad or incomplete planning and failure to look ahead, and also the starving of the Post Office of capital investment in the vital period five or six years after the war. Those of us who have had the pleasure to service in it do not disabuse ourselves of the fact that occasionally there are human failures. The hon. Member for Howden spoke of discipline, but discipline is there in the Post Office—very much so. When human failures can be pointed out, that is done with great alacrity to those concerned.

Mr. Bryan: I was talking about commercial discipline.

Mr. Dobson: I know what the hon. Gentleman was talking about, but I wanted to link it with the discipline which exists in the Post Office for obvious reasons.
The Post Office is facing some fundamental changes and problems. I should like to talk about two or three aspects of these. I hope that the Assistant Postmaster-General will be able to reply to some of the points and questions which I shall raise. I take the opportunity of saying that I am sorry that it will not be possible for me to stay here until the end of the debate as I have a pressing constituency engagement. I shall have to look up the replies to the points

I may make. I apologise to my hon. Friend the Assistant Postmaster-General for the apparent discourtesy in my having to leave before the end of the debate.
One of the fundamental problems facing the Post Office is its change of status to that of a Corporation. I think this is generally welcomed in the service as a whole, but I should like to be assured that the Postmaster-General is honouring his commitments to talk in great detail and with great openness to the staff on the whole question of the changeover and to make sure that he is in a position at all times to give the staff a very clear picture of what the position will be. There is a need to present such a picture to the staff at national level and at local level. Is it possible at regular intervals to give a progress report on his discussions?
May I also remind my right hon. Friend as the hon. Member for Howden did, that the most overriding points are those concerning the security of the postal worker and his superannuation rights in these discussions? If I may throw in a thought for the future I point out that some of the changes which are bound to occur in the change-over to corporation status will be very vast. They will be something which workers at local level will find to some degree difficult to understand and to appreciate clearly particularly in the first few years.
People who can do this best are not only those in the local management of the Post Office, but also local members of staff associations. I knew this in practice for 15 years when I tried to explain all the changes which were being made in practical terms to the people I had the honour to represent. When looking at the whole range of the discussions I asked my right hon. Friend always to keep in mind the suggestions—I put it no higher—that we could have some change in the way in which local staff associations do their job locally. The 1931 rules were made a long time ago and although there has been some relaxation at various times I should have thought that the consultation pattern and machinery for the future should be looked at while discussions are going on. That is very important so that local level staff may be aware of all the changes to take place.
As to the pattern of services—

Mr. Edward Short: As my hon. Friend has said that he will have to leave before the end of the debate and he has asked me for an assurance I should deal with that point now. We are in constant contact with the staff assocations on these issues. There are major issues. There is security of tenure and options. We are making excellent progress and calling together the staff associations all the time.

Mr. Dobson: I am extremely pleased to hear that. I was sure that my right hon. Friend would honour his commitments in this way.
I wish to speak now for a few moments about the pattern of services in the Post Office and to follow what the Postmaster-General said about the postal side and then the telecommunications side. The postal mechanisation has now come much more to the fore in departmental spending than it was heretofore. Many of us have been talking about this in general terms for a long time. We have made sure that people understand the way in which postal mechanisation can be brought about and we have always made clear that it must be introduced on a planned basis.
It is absolutely vital for any industry to have a planned introduction in this way. It is particularly vital on the postal side. The reason is that in the development of large-scale mechanisation during the next five or 10 years we shall not be dealing on the postal side with the same sort of problem as faces the telephone side. On the telephone side, we had a large staff which was constantly being wasted for various reasons. Marriage was one of the principal reasons. On the postal side the situation will be rather different because first we shall affect a large number of older people in isolated rural areas.
There the effect will be concentrated in larger urban areas and people in the rural areas will suffer. It will not only be that they will lose their jobs. Those in the urban areas can have their patterns of duty changed remarkably unless the mechanisation is well planned and thought out. If we want to use the machines efficiently they have to be used for long periods and not only in the mornings, then with a blank in the afternoon and again in the evening.
This brings me to the varying cost changes in regard to printed paper matter as compared with the fully-paid letter rate. I should have thought that the question of payment for posting earlier in the day could give better opportunity for postal staff to deal with the 35 million letters a day in a much quieter atmosphere. We have to remember that three-quarters of the total is posted after 5 o'clock. Such a change would help in the great pressures which are bound to build up under the present system.
One of the ill winds which blow when depression takes place in this country is that we get an improvement in Post Office staffing in some areas. My information is that the staffing difficulties which we have normally experienced in the central Midlands and London have now changed and that in the central Midlands almost to a man they have been cleared. I do not think there are any vacancies there, but there is still staff shortage in London. I believe that it is about 800 at present. What is the answer to this? I do not think that there is a single answer, but I make a suggestion on which I hope the Assistant Postmaster-General can enlighten me.
I cannot see why, in large blocks of flats and offices, it is not possible for the postman to deliver to a central point at the base of those buildings. The trend is towards high flats and, while there might at present be certain legal difficulties, I should have thought that, particularly in London, where a great deal of this type of building is going on, much staff time could be saved if postmen delivered letters to a central point on the ground floor instead of having to traipse from one flat to another, sometimes even having to clamber over roofs. The organisation to which I belong has for a considerable time been pressing the Post Office to consider this matter.
Suggestions were made last year for the introduction of certain types of social services for the Post Office. One was in connection with the Citizens Advice Bureaux. The idea was that the Post Office should be allowed to enable people who need advice, particularly in rural areas, to obtain from their local postmen and at post offices reply paid letters, which postmen would carry. I understand that it was suggested that an experiment on these lines should be carried


out, initially, at Bedford, Ulverston and The Wrekin. Has any progress been made with the idea? If not, when will the experiment start and, if it has begun, has the public responded to it?
In a similar way, experiments have been carried out with the telephone service. I understand that the first experiment has been taking place in Manchester. Are these new facilities being used by the public, is the idea proving a valuable contribution to the welfare of elderly people living at home and will the experiment be extended to other areas?
On the telecommunications side, the staffing position has probably improved, although this does not necessarily mean that improvements in the telephone service are immediately seen. It is bound to be some time before people no longer complain about having to wait to get telephone calls connected. This is partly due to the reasons I gave about the general difficulties of supplying the type of service that is always required.
In a Parliamentary Answer on 26th October, 1966, my right hon. Friend the Postmaster-General said that one reason for delay was that 9,000 contracts for equipment were behind schedule. There is bound to be difficulty when delivery delays of that magnitude occur. If such delays represent the sort of commercial expertise to which some hon. Members refer, it does not impress me. My right hon. Friend referred to exchange equipment and I am still wondering whether the equipment the Post Office is getting is the best available. Could there be an extension of co-operation between the telephone suppliers and the computer industry? Closer contact between the two might prove beneficial.
I was pleased to learn that the changes taking place in the trunk dialling system will include a new exchange at Bristol. I am sure that the way in which this is tackled will greatly ease the problems of that area, particularly regarding dialling, and that these improvements will filter through to other areas.
The most exciting new aspects of the work of the Post Office from a technical point of view are data transmission and satellite communications. These developments interest everybody. The data transmission service has been working

for some time. Has it developed as was expected when it was introduced? Has industry and commerce made the proper use of it? Is enough publicity given to this service? Are we reaching those who could use it to the best advantage? Is it meeting its own cost or is it being subsidised by some of the other Post Office services?
I was pleased to learn of the launching last week of the other satellite. It is probably too early to say whether or not it is operating satisfactorily. However, is there need for more European co-operation throughout Europe inside INTELSAT? We have good working partnerships with some European nations and INTELSAT is probably the best means of obtaining more orders for these international satellite and satellite communications schemes.
The Post Office seems to many people to be composed of mundane types of activities. These services must be worked efficiently, although the more revolutionary types of work are exciting to people like myself who entered the Post Office as young men. There is great need for more information to filter through from the top to people who enter the Post Office at the lower echelons of the scale. I hope that, with the new arrangements, people employed by the Post Office will be given an opportunity of learning about the activities of the Post Office as a whole and will not be content merely to learn about the services in which they work. This would be bound to improve the quality of the service, which is the desire of us all.

12.7 p.m.

Sir Ronald Russell: I echo the sentiments expressed by hon. Members in congratulating the staff of the Post Office for the work they did during the Christmas period, not only the regular staff but the additional people who came in to help. They did a magnificent job. We were warned to post Christmas cards by Tuesday, 20th December. I had to post a good many after that date and, as far as I know, they all arrived before Christmas Day. While the Post Office issues that warning to persuade people to get their Christmas cards and parcels posted early, if the public does not respond, the Post Office always does its best to get the mail through on time.
The Postmaster-General gave some figures of expenditure and said that the Post Office hoped to spend more on the scientific aspects of its activities. While that is of great interest, I wish to raise a problem of what might seem a more humdrum nature. The head Post Office in what used to be the Borough of Wembley, now the Borough of Brent, is in urgent need of a lot more room. I understand that the postmaster there would like to take the counter services elsewhere—for example, to a shop somewhere in Wembley High Road—and use the whole of the existing Post Office premises for sorting purposes.
There has been a great increase in post office business in Wembley in recent years, not because of an increase in population but because of the enormous increase in the number of businesses that have come to Wembley in the last ten years or so, in line with the desire to push office business out of the centre of London. I gather that the Post Office in Wembley is bulging at the seams and that the best way to overcome the difficulty would be to remove the counter services so that the whole of the interior of the building could be used for sorting.
I also gather than the procedure for acquiring premises is appallingly slow and that when a suitable site, such as a shop, comes on to the market a committee from the Ministry of Public Building and Works visits the site, inspects it and reports back. Then it must be considered at a high level in the Post Office. By the time that the procedure is completed, somebody else, with full decision powers, has agreed to take the premises and so the chance is lost and the procedure has to start again when another site comes on to the market. If it were a question of building a new Post Office on a virgin site, that procedure would be understandable, but for premises already built and recently vacated it seems a little absurd.
I understand that the figures of the Ministry of Public Building and Works Land Agents are based on either a 1939 valuation or a valuation made some years before current market valuations and usually the market price which the postmaster suggests should be offered is well below present day values and therefore has no chance of acceptance. I urge that

the procedure for acquiring premises should be modernised in the light of present day conditions and that much more discretion should be given to head postmasters to reach speedy decisions so that they can compete with private enterprise and obtain premises much more quickly.
Not only the post office in the Wembley High Road but the one in Alperton needs more space. As I say, there has been a great increase in the number of businesses in Wembley in recent years. The Wembley Park district also needs a Crown post office instead of a sub-post office. Many suggestions have been put forward about this over a number of years. I should like the Assistant Postmaster-General to give us some information about this if he can and say whether, in the light of the office development which has taken place in recent years, especially in this area, there is a chance of a Crown post office being built.
The Postmaster-General said that post offices were now to close at 5.30 instead of 6 p.m. to help alleviate staffing problems. I appreciate that it will be a help in that respect, but it will not be a help to the business community, because most business offices, certainly those in the Wembley area, do not close until 5.30. Therefore, their letters are not taken to the post until 5.30. If they have their own franking machine, I understand that they are supposed to take their letters to the post office and not put them in a letter box. Therefore, when they want them posted they find that the post office is shut.

Mr. Edward Short: They can make arrangements to take them direct to the sorting office.

Sir R. Russell: I appreciate that, but that is not a help if the sorting office is some distance away, as it is in the case of Wembley Park. I hope that that point will be considered.

Mr. Randall: Would not the hon. Gentleman agree that the firms in Wembley should be encouraged not to wait until 5.30 before posting their letters, but to put them in the post early in the afternoon to facilitate their treatment?

Sir R. Russell: I appreciate that. I am not trying to encourage firms not to


post their letters until 5.30, but if they have to send somebody to the post office, say, every hour or half hour, additional problems are caused for their own staff. That must be borne in mind. There is a tendency for shops in all classes of trade to stay open later rather than shut earlier, certainly on one night in the week. While I appreciate the staffing problems of the Post Office, earlier closing is a step in the wrong direction in the present day world.
The hon. Member for Bristol, North-East (Mr. Dobson) said that he thought that there was a staff shortage of 800 in London. I should he grateful if the Assistant Postmaster-General would say what percentage that represents of the total Post Office establishment in the London area. Is the shortage evenly spread over the whole area or is it in pockets? Is it worse in north-west London than in south-west London, for example? It would help if people who are complaining about the postal services could be told the reasons for the Post Office's difficulties.

Mr. Dobson: I do not intend to reply to the point on staff shortages in London, which would be better dealt with by the Assistant Postmaster-General at the end of the debate. The hon. Gentleman said that the earlier closing of post office counters was to improve staff attendances. It is clearly understood that it will do that, but another reason for it is economics and post office costs. Earlier closing will save the Post Office a lot of money, quite apart from the coincidental fact that it will improve attendances for the staff.

Sir R. Russell: But we must also think of the customer.
I have had a number of complaints about parcel post delays in Wembley in recent months. I do not wish to go into detail, but I wonder whether the Assistant Postmaster-General can say what are the prospects of improving the parcel post service. I do not pretend that the delays are due entirely to the Post Office. I am sure that British Railways must take their share of the blame, too. I have heard it said that sometimes customers pay for express delivery which has been slower than the normal post and that parcels posted later than parcels which have been expressed arrived at their destination first. That is something which I am sure the hon. Gentleman would deplore.
My hon. Friend the Member for Howden (Mr. Bryan) mentioned the increased charges. I have had complaints about the increases in recent months. Some of the increases made on 1st October last were extraordinarily large. Postage for ordinary and air letters overseas, for example, increased by 50 per cent.—from 6d. to 9d. That is an extraordinarily steep increase. The registration fee has increased from 1s. 8d. to 3s.—an increase of 80 per cent. I do not know how such a savage increase can be justified, credit squeeze apart, unless the Minister hopes that industry, which I imagine is the chief customer of the registration service, will stand the increase and that it will be a long time before the fee has to be increased again. An increase of 80 per cent. takes a great deal of justifying.
I wish to say a few words about the telephone service and particularly the problem of higher charges for S.T.D. metering compared with the previous system. The other day one of my constituents received an account for the first quarter on S.T.D. The bill had jumped from an average of about £6 to £10 18s. 9d. I gather that in that quarter he had been charged for 801 units whereas in previous quarters the average had been 200. In the quarter since the quarter in which he was charged for 801 units the figure has gone down to under 200. I should think that there must have been something wrong with the meter in the first quarter on S.T.D. because I do not think that my constituent was any more talkative on the telephone during the September quarter, which included the holiday period, than he had been previously or has been since. I hope that if I give the hon. Gentleman my constituent's name and telephone number he will have the account examined because it would seem that there is something wrong with it.
What progress is being made in catching people damaging telephone kiosks and robbing the telephone boxes? The Postmaster-General did not say anything about that. Has consideration been given to adopting the French system of payment by means of a metal disc, which I think is called a jeton, which makes pilfering pointless, because it has no commercial value and can be exchanged for money only at the post office. It would also have the advantage that if the right hon.


Gentleman was compelled to make increased charges the telephone boxes would not have to be adapted.
Finally, may I ask when we shall all have to change over to dialling digits, as the Post Office calls it, instead of dialling the first three letters as we do in the London area? I think this is an unfortunate step because it is much more difficult to remember figures. If it is technically essential to have this change, then of course we shall have to put up with it. I was in San Francisco in 1965 just after the change to digit dialling had taken place, and I gathered that the Americans there did not like it at all, but they had to put up with it. I suppose we shall have to do the same thing. I realise that this is probably a step forward in the furtherance of international communication. One is able to get through to the Continent by dialling figures, whereas previously one has had to go through an operator. I hope, however, that the change can be made as smoothly as possible.
I trust that the Assistant Postmaster-General will try to answer some of the points I have raised.

12.21 p.m.

Mr. R. T. Paget: I hope my right hon. Friend the Postmaster-General will not be seduced into adding jetons for telephone calls to the problem of finding sixpences for parking meters. So far as I am concerned, I can visualise the situation in which whenever I want to make a telephone call I shall almost certainly not have a jeton in my pocket.
While I am on this subject, I should like to mention that on the wireless this morning there was a statement that the 3d slots on the new machines were being closed. I should like to hear a word on this point. If this is a straight increase in price, how does it fit in with the general policy on prices? Is this matter of cheap dial calls a direction in which one would choose to make a price increase? My own feeling is that it is not.
I wish to speak this morning on two very narrow points. First, the Post Office is a monopoly, and I feel that a monopoly has special responsibilities for fair dealing. As a monopoly, the Post Office can draft its own contracts and

we, the users, have no alternative except to accept them. Those contracts tend to be drafted so that they make the Post Office the judge in its own cause on all questions that may arise under a contract, and this question ought to be looked into.
For instance, the telephone contract provides that the telephone bill shall be conclusive evidence as to the sum due. It cannot be challenged in any court. Telephone bills are quite often wrong. Apart from errors which may occur in dialling, we hear that errors occur in computers. Under the old system one had to dial 100 and tell the operator the number that one required, and then one was asked to give one's own number. One could give somebody else's number, whereupon the charge would be made to somebody else.
I suppose that if people did this regularly they would be caught, but I myself have done it on several occasions. When my telephone has been out of order, both in the country and in London, I have used a friend's telephone and, having made the call, I have given my number. My number has been accepted without any question. This is a danger which must occur on occasions.
Some years ago I found on my bill a charge for a rather long call to Brussels. I knew very well that I had not spoken to Brussels and I took this up with the Post Office. As a matter of grace, the Post Office removed the charge for that call from my bill—but, I may say, after quite a lot of argument and it was not a very graceful act of grace. I do not know whether the fact that one is a Member of Parliament means that one has rather more consideration in this sort of case.
Far more serious is a case which arose in my constituency. A constituent of mine had let two rooms, which included a telephone. It is reasonable, I suppose, if this had not been a very short let, that he should have arranged for the telephone to be transferred to his tenant. But these things cannot always be done. He had a row with his tenant who went into the room, locked the door and settled down to send telegrams and cables. I do not recollect the exact number, but by the afternoon he had incurred a charge of something over £400.
Half way through the afternoon my constituent became suspicious of what was going on. He rang up the telephone exchange and said, "Would you please cut this man off?" The answer was, "We cannot do that. Telegrams are dealt with at Leicester." He got through to Leicester, but was told, "We cannot do that. This is a Northampton telephone." He eventually got on to the police, who said, "We have no jurisdiction." In fact, it was the police, and not the Post Office, who showed a little enterprise, because in an illegal way a police sergeant in our force committed wanton damage on Post Office property. He went along with a clipper and he cut the wire. It was only at that point that the calls were stopped.
I had a tremendous argument and a long personal interview with my right hon. Friend's predecessor about this matter, and eventually the Post Office agreed not to charge for the calls later in time than the request to the exchange to cut off the calls. But still my unfortunate constituent lost some hundreds of pounds. It was something over £200. It seemed to me that in view of the marginal cost there had been almost a direct profit to the Post Office. This was not a question of, "Where you have a rogue, who shall suffer the damage?" It was a question of, "Where you have a rogue, who gets the advantage of it?"
I believe that in the case of contracts by a monopoly which are as one-sided as this, even where the Post Office acts reasonably as a judge, it would be more just if the contracts were so drafted that the judge was not the Post Office. This is where a lot of the difficulty arises.
The other point which I wish to raise concerns betting. In regard to pools, to bookmakers, and to almost every form of betting, the validity of bets depend upon the timing postmark on the envelope. Without in any way being puritanical on the subject of gambling, I am one of those who believe that the colossal increase in gambling is one of the greatest social evils of our time. None the less, it is one which is of great benefit to the Post Office. The gambling customer is one of the Post Office's biggest customers, and, since the Post Office is not the censor of our morals,

if it accepts the custom it should provide the service required.
When I raised this matter with my right hon. Friend, I was told that, broadly speaking, the timing of letters was something which was done for the convenience of the Post Office and not for the convenience of the customers. The result is that on occasions a letter can be franked, or timed, not only many hours after it was posted, but many hours after the collection time on the box in which it was posted. People who have had a win, or have marked down the right number of draws, are bitterly disappointed and very angry when they find that although they posted their letters in very good time in a box that was marked for collection well before the necessary time, the letters were subsequently franked too late in accordance with the arrangements of the Post Office.
If the Post Office is accepting this very large custom, it should try to work out a system in which the time of collection appears on the envelope rather than the subsequent time for which, for internal reasons, may be more convenient. If necessary, both times could perhaps appear.
It may be said that this is difficult and that it might involve some problems and fraud. That could be so. But considering the large volume of business it is something about which the Post Office should do a good deal of thinking. It might be that I am merely anticipating things and that the Select Committee has already done some thinking about this. Perhaps when we get its report we will have a scheme by which this can be worked out.
There has been criticism that it has been a long time since we had a debate on the Post Office. But instead of having a debate, we have had a Select Committee—I think for the first time—really working on the Post Office, and, frankly, I happen to be a believer in Select Committees. In practice, this may prove to have been a good deal more valuable than a desultory debate in the House. I personally look forward to the report of the Select Committee when it comes out. These are very short and simple points, and I hope that, if not immediately, then perhaps by correspondence, my right hon. Friend may be able to deal with them.

12.35 p.m.

Mr. Gordon Campbell: I hope that the Minister who replies to the debate will be able to answer some of the points which the hon. and learned Member for Northampton (Mr. Paget) has raised, which promise some interesting answers. I will not follow the interesting points which the hon. and learned Member raised, because I wish to devote most of my brief remarks to the giro system.
In general, I am in favour of the development of the Post Office along commercial lines, which is inherent in the proposal that it should be a public corporation in four or five years' time. I am, however, worried about the monopoly position in which that public corporation would then find itself. We have to remember that the convenience of the public is a matter of primary importance.
Secondly, the question of the loss of Parliamentary control means that we in this House will not be able to question a Minister about matters affecting the general public.

Mr Edward Short: indicated dissent.

Mr. Campbell: I am glad to see the right hon. Gentleman indicate that there will not be such loss of Parliamentary control, because this is what is worrying hon. Members about this proposal.

Mr. Short: The Post Office Corporation will be subjected to roughly the same amount of Parliamentary scrutiny as are, say, the power industries at present. The House will have noted that the Minister of Power has recently been answering a number of Questions about the coal industry. The Post Office Corporation will also still be looked at from time to time by the Select Committee on Nationalised Industries, as it has been this year. There will, therefore, be a fair amount of Parliamentary accountability remaining.

Mr. Campbell: That is reassuring as far as it goes. Regarding the nationalised industries which the right hon. Gentleman has mentioned, however, it is not possible to go into individual cases or very often to go into questions of tariffs and price rises, because they are considered to be day-to-day commercial decisions. I will not go into this matter

further now, but I am sure the right hon. Gentleman must be aware that hon. Members on this side of the House, and, I suggest, on the other side of the House also, are worried about whether the interest of the general public will be looked after in a future organisation of this kind.
I should like to join with other hon. Members who have pointed out how hard and conscientiously the staffs of the Post Office work. I, like other hon. Members, visited post office staffs over the Christmas period, and I was particularly impressed by their enthusiasm and hard work during that difficult time. The question we must ask ourselves, however, is whether the Post Office staffs are able to produce the best results in the different services for which they are responsible.
Complaints which I have received in my constituency relate mostly to the lateness of mail. I agree that because my constituency is in the north of Scotland there are geographical problems. When inquiries have been made by the authorities into the lateness of postal deliveries of mail arriving from the South, it has usually been found that the mail has travelled by van over high ground which is normally subject to snow and ice during the winter and this causes delay.
I admire the drivers and postmen who have to carry out this difficult task. Until a year or so ago, however, letters from the South came by rail, and many of my constituents would like to know why there should now be this change. There are particularly difficult conditions on that route in winter and it is not surprising that the postal deliveries are erratic during these months. That is the kind of thing which must be looked into.
I come now to the question of the giro. Clause 2 of the Bill ensures that no obstacle will be placed in the way of the Postmaster-General in operating a giro system. A new service of considerable magnitude will now be coming into effect in the autumn of 1968 if the Postmaster-General's hopes are fulfilled. We ought to be examining what is being done to bring this service into effect.
We had a debate on this matter on 21st July, 1965, which was quite a long time ago. At that time, the former Postmaster-General outlined the scheme which the Government proposed to introduce and the House of Commons passed


a Motion welcoming such a system. Briefly, the reasons for it were that it would fill a gap in easy transmission of money, not in very large sums, especially for persons who did not have bank accounts. Secondly, it had been operated successfully abroad by several other countries. Thirdly, it would replace the clumsy systems of postal orders and money orders which have been in existence for a very long time and are now out-of-date.
Another reason was that the system could be easily computerised and thus could be quick and efficient. Another one, which is important but not immediately obvious, is that it will reduce the targets for robbery by cosh gangs and others because there will be less money and valuable documents like postal orders lying about to be stolen, particularly if wages were to be paid in this way—and that is something which could be expanded.
I supported the system for those reasons but I pointed out that before it was proceeded with, market research should be undertaken to see whether there would be enough users of such a system. I emphasised the importance of institutional users—public utilities, large firms, shops and others—because they would find it a useful way, as their equivalents abroad have done, for enabling their customers to settle their accounts. It can save time and trouble both for the creditor institutions and for their customers.
The important piece of market research that was needed, however, was to ensure that there were enough of the institutional bodies to make the system worth while. One would need a minimum of them to have adequate balances for investment and thus to enable the giro system to pay its way.
I assume that such research has been done because the Government have gone ahead with their plans. There was a White Paper in August, 1965, and since then two booklets, copies of which I have with me, have been issued by the Post Office on the giro system. The larger of the two booklets was concerned with giving the new project publicity and from the back of it it appears to have been produced by a publicity firm for the General Post Office. The second

booklet, the smaller of the two, was issued in six areas of the country with a reply-paid postcard seeking information, presumably from individuals and institutions, as to whether they would use the system.
The small booklet was issued in those six areas but I was rather surprised by their distribution. For example, not one of them was in Scotland. I do not know why the areas in question were chosen. The large booklet appears to be a fairly expensive document. I hope that it was worth while. It was not the kind of market research which I had in mind. The general point to which I would like to draw attention is that in several important matters those booklets depart from the original scheme put forward in this House and then outlined in the White Paper. They depart in respects which are to the detriment of the customer and the general public.
The Postmaster-General knows that I am concerned with this matter because I have put down Questions to him on two points. The first is the question of a minimum transfer of 5s. The large booklet states that the minimum transfer will be 5s. and that lesser sums cannot be transferred under the giro system. In answer to a Question from me on 26th October, the Postmaster-General said that this would be uneconomic.
The right hon. Gentleman's predecessor, outlining the system in the debate in 1965, said:
I can only tell the House that on our basis of calculation at the moment it would be possible not just to break even, but to get an 8 per cent. return over the long run on a giro system with as few as 1¼ million giro account holders".
The European systems on which the Postmaster-General at that time also said that our system would be modelled mostly do not have a minimum amount of this kind. Of 12 European countries with giro systems, only two have a minimum. Holland has a minimum of 6d. and Italy the equivalent of 1s. 2d. So that to place a minimum of 5s. on our system immediately makes it different from the kind of giro system which we expected when we discussed this matter and heard the former Postmaster-General's plans.
Secondly, in that debate the then Postmaster-General indicated that the new


giro system would replace the existing postal order and money order systems. If he did not say that it would replace them altogether, he certainly indicated that it would to a large extent. I will quote him on this. At one point he said that
postal orders or money orders … are very old-fashioned and extremely expensive ways of transmitting money.
He also said of the service that
it will be replacing in this respect the existing Post Office remittance services." —[OFFICIAL REPORT, 21st July, 1965; Vol. 716, c. 1635, 1638.]
We who listened to that certainly thought that one of the advantages of the new scheme was that it would modernise and replace the present clumsy systems of transferring money.
If the new scheme is not to replace those systems, it will undermine the systems which the institutions will wish to set up for settling their accounts. If any account or bill for less than 5s. cannot be transferred under the giro system, this means that a firm or large department store must have two systems for receiving remittances. I think that most of them in looking at the scheme hope that they will be able to set up one system for dealing with giro payments and will not also have to cope with a postal order system for any amounts of less than 5s. They cannot stipulate to their customers that in their monthly accounts they cannot run up a sum of less than 5s.
That again is less than was promised in our debate and in the White Paper of August, 1965. It also reduces the attraction of the system as a replacement of the older remittance systems in the Post Office and as a catalyst for efficiency, which is one of the things we want, in settling accounts all over the country.
My next point is that the large booklet states that the Postmaster-General should retain the right to close an account without notice and also to refuse to open an account. I am particularly concerned with the question of closing an account, because nothing about this was said in the earlier proposals. When I asked the right hon. Gentleman a Question, his reply was that this was to avoid fraud or abuse. If, as I hope, the giro

system succeeds and expands, the Postmaster-General, or the head of the new public corporation later, could have almost dictatorial powers, especially over business account holders. If a firm has built up a system under which its incoming payments can all be made by giro, its giro number is known to all its customers, and it sends out its forms with all its bills, and then the Postmaster-General suddenly closes its account because he has information—which could well be incorrect—that there is some abuse or fraud, he has a tremendous power over the future prosperity of that firm. The point is that he could easily be wrong.
There is also the question of closing a private person's account, perhaps because he has not been using it very much. I understand that in at least one country in Europe if an account holder does not use it for six months or more he may be asked to close it. But there may be a case in this country where someone is sent abroad for six months or may not use the account for some other reason, such as being in hospital. If the Postmaster-General has power summarily to close the account it can cause hardship and exasperation with the system.
I therefore have two suggestions to make. First, some sort of independent tribunal should be put forward in the proposals for a giro system so that the question of whether an account should be closed, or should be refused in the first place, on the basis of information received by the Postmaster-General can be considered and a hearing given. Otherwise, this could be a case of someone being sentenced without a trial or hearing.
Secondly, to deal with my second point concerning private account holders, I suggest the careful formulation of a simple set of conditions, which should be seen by anyone who first applies to open an account with the Post Office giro. I ask the Postmaster-General to avoid having a lot of small type on the back of the form. Some simple conditions should be plain to a person before he opens an account, so that he knows the circumstances in which he may be asked to close it, such as that he is not using it enough.
It can be said that a person with a bank account can be told summarily by the bank to close it. But there is a difference. The individual can then go to another bank and ask to open an account there. But the Post Office giro system will be a monopoly in this respect, and if the account is closed the individual cannot go somewhere else and open a similar one.
There is another departure from the original proposal. In paragraph 10 of the White Paper it was said:
…a statement will be sent to each account holder whenever there is any change in the balance held.
But in the large booklet which has now been put out it is stated that private account holders, as opposed to business account holders, will not be sent a statement for debit changes unless that is particularly requested. Therefore, a person's account could continue to be debited without his being informed, unless he has made a special request for that to be done. I believe that private and business accounts should be dealt with equally fairly. The individual should be able to opt the other way, to receive a statement for every change in his balance unless he asks that that should not be done because he is content to receive it only periodically.
Another point that arises from the booklet is that it seems that there will be a subsidy on Stamp Duty for the giro system, because it is said that 50 of the forms will not cost more than 7s. 6d. A small calculation shows that this must be a subsidy on Stamp Duty. If it is not, an explanation is needed.
It has been said that the system may be unpopular with the banks, and that there may be competition with them. The banks have made clear that they are considering new systems for their customers. In the past few days one of them announced a comprehensive debt debiting system as a new project. As I indicated in the previous debate, I favour co-operation between the giro system and the banks as far as possible. I believe that the giro system and the banking system can be complementary, and that it should be possible in the future for transfers to be made between one system and the other with ease.
But there is bound to be a certain amount of competition between the banks and the giro system—and it will be healthy competition—in the area of persons who have not got bank accounts now but who might open them in the future and who will also be attracted by the giro system. That competition will be good, but if the Postmaster-General is going to let the giro system off some Stamp Duty, as opposed to the stamp duty on cheques and other documents, that is the sort of small point that could be thoroughly irritating to the banks and prevent the harmony which should be possible. I am in favour of abolishing Stamp Duty altogether, but while it is with us it should be applied fairly.
Those are a number of points of difference between the original scheme and what is now proposed. I ask the Postmaster-General to compare the proposals put forward by his predecessor and the past statements with what is now proposed. In speaking of the giro system today the right hon. Gentleman said that he thought that it would be flexible. I think he said that he thought that it would be more flexible than existing systems abroad, but the points I have raised militate against flexibility and with the five shilling minimum it is likely to be much less flexible than the European systems.
I want also to ask him about equipment. I know that the contract for the major equipment at the centre at Bootle has already been made, but we are only 20 months away from the beginning of the system and the institutional users will need particular office machines to deal with it. Has the Post Office yet been able to give the particulars of the system they will use to enable the manufacturers to start making the machines? This is important not only for our own system but because if we are now, as I hope, constructing a really up-to-date giro system we should be able to export some of those machines to other countries which will be modernising their older giro systems. I therefore ask him also to look into the export potential and the question of standardisation. We would like to know whether the Government have yet been able to supply the information to enable the manufacturers to start.
I do not expect the Assistant Postmaster-General to answer all the points I have made today about giro, but as it is difficult to have a debate about this very important new system I hope that he will arrange to make a statement replying to the points, or that he will write to me, or in some other way enable the House to know what he is doing on these points.
Finally, I come to the question of charges. The charge for a non-account holder, somebody paying into the giro system, is set down as 9d. Only two years after the giro is to come into effect, a decimal system is to operate and under the Government's proposals 9d. will be 3¾ of the new unit, which is impossible. Therefore, that charge cannot be considered very reasonable or realistic as set out now. I hope that it will not simply mean rounding off upwards. I know that the right hon. Gentleman has a problem here, because the same thing applies to the 4d. stamp and many other charges. I know that the Post Office made representations to the Halsbury Committee—this is recorded on page 77 of its Report—in favour of the 10s. system as opposed to the one that the Government are now putting forward for decimalisation. I am fully conscious of the difficulties that the Post Office has about the decimalisation system proposed by the Government and that there will be a temptation to round off charges upwards.
The problem of handling cash and dealing with fractions under the Government's preferred system of decimalisation will frustrate many Post Office officials working with cash for hours on end, particularly during the two-year period of transition when the old currency and the new currency will be circulating together. I do not expect the Assistant Postmaster-General to say anything about this today, but I would point out that he and his right hon. Friend can represent very strongly within the Government the interests of their staffs throughout the country in regard to choosing the right unit for decimal currency, and also the interests of the general public using post offices, because they also will be much concerned and

closely affected by the frustrations and difficulties if the wrong system is chosen.
A final decision has not yet been taken on this question. I have great sympathy with the Post Office on this aspect of the matter, and I hope that the right hon. Gentleman will use his influence as strongly as he can. I believe that he will have support not only from many hon. Members on this side of the House but from a large number of hon. Members on his own side as well.

1.2 p.m.

Dr. M. P. Winstanley: I should very much have liked to follow some of the observations that hon. Members have made in the debate, particularly the hon. and learned Member for Northampton (Mr. Paget) in his interesting arithmetical abstractions about telephone accounts and the curious matter of using the telephone service as a method of applying sanctions. I should also have liked to follow up the discussion of digital dialling vandalism in telephone kiosks, and many other matters which concern all of us very much. However, I will resist these temptations in the interests of brevity, save to reiterate the words of one hon. Gentleman in congratulating the Postmaster-General and his Department on the excellent way in which the postal service operated during the Christmas period.
My admiration for the way in which the postal service operated was somewhat mitigated by the fact that I found, to my disappointment, that the numerous documents from pressure groups and other bodies which arrive relentlessly every day for hon. Members continued to arrive during the Christmas period with a remorseless regularity. I am sure that the congratulations of the whole House are due to those responsible for the operation.
I shall concentrate my remarks, as the hon. Member for Moray and Nairn (Mr. G. Campbell) did, on Clause 2, which facilitates the introduction of the giro system. It is some surprise to me to find myself in almost total agreement with the hon. Member, who represents the constituency which contains that small place immortalised by William Shakespeare under the name of "the blasted heath". However, I agree with


the hon. Gentleman almost entirely in his observations about the giro system. There is no doubt that criticisms have been voiced regarding apparent variations and disparities between what is now proposed and what was originally contemplated in the White Paper.

Mr. G. Campbell: It is over the "blasted heath" that the Post Office vans have to drive in winter, and I hope that the Assistant Postmaster-General has taken that into account.

Dr. Winstanley: I leave it to the Assistant Postmaster-General to embark on further discussions about the "blasted heath".
The hon. Gentleman referred to the question of the establishment of a minimum transaction of 5s. when it was utterly clear that the White Paper referred specifically to "cash remittances of any kind". It is equally clear that other countries operating postal giro services do so without a minimum, and in those which have a minimum it reaches a maximum of 1s. 2d. The range is very narrow. So it is possible to operate without a minimum. Since it is possible, is it desirable? The reasons advanced earlier are still valid.
One of the objects of the exercise is to get rid of other more complicated, more extravagant and more expensive methods of transmitting money. There have been many references to this in many places. It is clear that if we have the minimum it will mean that many people will have to continue to use the joint stock bank cheque services or postal or money orders, all these things which the former Postmaster-General described as being old-fashioned and extremely expensive ways of transmitting money. I do not wish to push the matter too far because it has been gone over previously, but I feel that the House is entitled to an explanation for what is, clearly, a change in policy.
The situation with regard to the notification of change in balance is also utterly clear. The White Paper was explicit in referring to the arrangements. It said that a credit slip would be sent to each account holder after each deposit or transfer to his account and that a statement would be sent to each account

holder whenever there was any change in the balance held.
Once again, we have a departure, though it may not be a very important one. It is true that the private person can, as it were, opt in, whereas, clearly, if we were to follow the policy in the White Paper the right thing would be for him to have the opportunity of opting out. Whether this is very important or not, I am not competent to judge. Nevertheless, it has been suggested that lack of information of this kind could lead to the system being exploited from time to time for criminal purposes. I leave the Postmaster-General to judge whether or not that is a valid point.
The hon. Gentleman referred to the fact that the previous Postmaster-General had stated, when referring to charges, that he was expecting a yield of about 8 per cent. It seemed, therefore, that there was no real need for us to have to accept Stamp Duty in addition to any charge which there is at the moment. I think that Stamp Duty on almost all accounts ought to be on the way out. I should have liked to hear that it was on the way out, but it appears that it is now on the way in in yet another direction. This is regrettable.
On the question of closing accounts without notice, there is a point not previously put forward that I hope the Assistant Postmaster-General will answer. There is a legal precedent—I cannot quote the exact case, but hon. and learned Gentlemen will be aware of it—for requiring banks to give seven days' notice before closing an account. If this is necessary in the case of the banks, I suggest that it is wrong to allow the giro to close an account without notice. I am not at all sure that I agree with the hon. Member for Moray and Nairn that there should be an independent tribunal to which appeals could be submitted. I do not go that far. I would not recommend that there should be independent tribunals to inquire into the activities of other commercial organisations and decide whether or not they should be allowed to choose their own customers. If we are to regard this in any sense as a commercial operation, I do not think that we should interpolate some new structure of that kind. Nevertheless, I agree with the principle


that closure without notice is wrong and that we should follow the established legal precedent by banks and have closure at seven days' notice.

Mr. G. Campbell: I was making the point that, because the Post Office is a monopoly, there should be some kind of procedure or institution which would enable a hearing.

Dr. Winstanley: I agree that there must be some procedure or institution and that in some sense, the Post Office is a monopoly. I am not sure that I would agree with the hon. Gentleman's solution, but I think he will agree that the requirement of seven days' notice would at least provide an opportunity for inquiries and approaches of one kind or another. However, I do not think we need go into the method by which such inquiries could be conducted.
From previous debates, it seemed that the giro service was to operate throughout all post offices. One gets that impression from the HANSARD report of the debate in July, 1965, when I was unfortunately, not present. There are, clearly, not only arguments to support having it in all post offices—but to show that it is particularly desirable in the smaller and more remote offices which are in remoter areas where other methods of transmitting money are less readily available. It is in such areas that the giro service has potentially the most value.
There seemed no suggestion, in the White Paper or in the statement made by the right hon. Gentleman's predecessor or any of the discussions which have taken place formally, of any restriction on the number of post offices in which this service is to operate. In the booklet there is a clear reference to the fact that certain of the post offices, will not, however, be used. On page 8, it says:
You will be able to pay in as much money as you like whenever and wherever there is a post office open (except for the very smallest ones).
But the Scottish, Welsh, Northern Irish and English rural areas have very small post offices. This suggests that the smallest post offices will be precisely those in which this service might be needed most.
I do not want to push these various points too far. I accept that there may well be good reasons for changing from

previously announced policy, but, at the same time, the House is entitled to hear them. I remind the House that the Liberal Party, for which I am speaking, has always supported the giro system, in common with many other hon. Members, and has given every possible assistance to the Postmaster-General and his predecessor on this subject.
Our support on the last occasion was given by my hon. Friend the Member for Devon, North (Mr. Thorpe), who is now the Leader of the Liberal Party—which, I am sure, will show that there has been no major departure from our policy on this matter and will also show the Assistant Postmaster-General that there are almost no heights which cannot be scaled by hon. Members who speak on Post Office matters.

1.14 p.m.

Mr. Stratton Mills: I welcome the opportunity once again to debate the affairs of the Post Office and the fact that a Select Committee of this House is now examining the Post Office. Surely the Post Office is ideally suited for one of the specialised committees of the House which the Leader of the House has been suggesting. With all the new developments envisaged for the next two years, such a committee would have very useful work to do.
The Assistant Postmaster-General may have seen the article in the Financial Times on 11th January which described the G.P.O. as
… a giant in a quandary.
I think that well expressed the position the Post Office finds itself in. On one level it is highly mechanised while on another it is one of the most highly labour intensive industries in the country. This is essentially the dilemma of any Postmaster-General.
The other evening I was re-reading what I consider to be the best analysis I know of the Post Office. It was given by my right hon. Friend the Member for Wallasey (Mr. Marples) in the debate on 22nd July 1965. He highlighted three main problems facing the Post Office—that it is too big, too varied and has too much Treasury control. The reforms suggested by the Postmaster-General follow very much from that pattern. My right hon. Friend went on to say that he felt it essential to have a non-Parliamentary


head of the Post Office and that it should be broken up from one monolithic block into a number of smaller self-contained units. It seems to me also that the Minister's proposals are moving in that direction.
My right hon. Friend went further. He referred to the need to separate the telephone system into a public utility like Bell in the United States. I gather that the right hon. Gentleman is not prepared to follow that proposal, but I hope that it will not be forgotten, for it may well be that the capital requirements of the telephone service in the years ahead provide a substantial and forceful argument for having it as a separate public utility.
The Postmaster-General's statement on 3rd August, the appointment of Mr. Wall and the continuing work of Messrs. McKinsey and Company are all movements in the right direction and are to be welcomed. I join with my hon. Friend the Member for Howden (Mr. Bryan) in suggesting that we do not seem to have had a sufficient flow of information from the Post Office as to what exactly is being done. Perhaps the White Paper to be published in the spring will include the information in very much greater detail.
For example, the "Little Neddy" was announced in December, 1965, but we have heard little of what it is doing. I believe I am right in saying that its setting up was not even announced in Parliament. This matter is to be regretted. Again, we have not heard much before today exactly what Messrs. McKinsey and Company is doing. I understand that its report will not be published. Surely there is need for some type of summary of these recommendations, and I hope that the hon. Gentleman will look at this again.
I understand that the McKinsey Report concentrates on improving the productivity in the postal service. We are told that the increase in productivity has been only one half of 1 per cent. over each of the last five years and that the aim is to increase this to 2 per cent. I understand that the company is making considerable efforts to improve counter service for the convenience of the public—this again is most welcome.
One thing the firm does not seem to be doing is studying the whole question of the postman's round. Some suggestions on this subject have been made

in the debate. I may be wrong in what I have said, but I hope that Messrs. McKinsey and Company will look at the postman's round to see whether it can be made more efficient and less labour intensive.
I want to turn now to the accounting methods of the Post Office. In the debate in November, I was struck by the increase in costs and the very large losses that certain sections were having on their turnover. For example, the loss on parcels was 20 per cent. on turnover; on registered mail the loss was 25 to 30 per cent. on turnover; on the remittance service it is 20 per cent. and on overseas services 10 per cent. I am not making a party political point of this, but it is odd that losses of that size should have been reached in a semi-commercial organisation like the Post Office without some action being taken before losses reached anything like 20 to 25 per cent.
I hope that when McKinseys are looking at the Post Office they will see whether the Post Office accounts as a whole could not be brushed up a little and brought into line with the best commercial practice. Could they see whether the breakdown of profit and loss among various detailed sectors of the postal and other services is prepared in accordance with the best commercial practice and whether there has been proper apportionment of overheads? Perhaps they could also let us know whether the value of the assets of the Post Office are included in the accounts at anything like their modern value, or whether they are purely written down figures. Some of the properties held by the Post Office seem to be included at entirely historic figures. Perhaps the whole accounting system and preparation of accounts might usefully be considered by McKinseys.
It will have been noted that in the Press on 6th January there was an announcement that Sir Frank Kearton at the Industrial Reorganisation Corporation was to conduct a probe into the communications industry's relations with the G.P.O. Perhaps the Assistant Postmaster-General can give us more information about exactly what is to be done by that probe. However, we must all welcome the more competitive spirit being shown by the Post Office in getting a much wider range of tenders for its equipment.
I also noticed in the Press of 24th May last year a report of a speech by the President of the Union of Post Office Workers, Mr. Harry Burnett, in which he said:
Although we have progressed in the matter of consultation it is, in the large majority of cases, consultation after the decision has been made. What is wrong with consulting us before the decision is made? What is wrong with making us part of the decision?
He went on to say:
… we are met by an implacable resistance on the part of management and an overpowering indifference on the part of the politicians.

Mr. Randall: indicated dissent.

Mr. Mills: I hope that that is not truly representative of the feeling in the union, although I remind the hon. Member for Gateshead, West (Mr. Randall) that Mr. Harry Burnett was the president of the union that year. In the period ahead of the Post Office, in the changeover to a public corporation, it will be immensely important that it should not be possible for that kind of comment to be made by the President of the Union of Post Office Workers.

Mr. Randall: I am not aware of that statement, but the House should know and the hon. Gentleman is probably aware that in practice the consultation machinery in the Post Office probably reaches the highest level anywhere in staff consultation. There is great credit to both sides. I do not know the background to that statement, but I am a little surprised by it. I am sure that the hon. Gentleman is as aware as most of us of the long high tradition of staff consultation between the unions and the Postmaster-General, a tradition which has been a very good example to other employers.

Mr. Mills: I am glad to hear that, but I remind the hon. Gentleman that Mr. Burnett's speech was made at the union's conference in Douglas and he was making the point that in his view consultation took place only after the decisions had been made. He was asking that the consultations should bring the unions into the picture before the decisions were made. I do not propose to press the matter. I merely make the comment that particular attention should be paid to this in the period ahead.
I turn now to the subject of letter services. The right hon. Gentleman said that 83 per cent. of all letters were delivered the following day, and about 92 per cent. of all letters in the fully-paid post were delivered the following day and 80 per cent. of all parcels within two working days. That is entirely at variance with my own experience, and I hope that we can be told a little more about the method of sampling used by the Post Office in the preparation of these figures.
Another important decision of the right hon. Gentleman is that to close a number of post offices at half past five. I fully take the point that the staff of the Post Office works what its own union has described as "unsocial hours", but I wonder whether a mistake has been made, particularly with the background of the Government's exhortations to all sections of industry to work harder and increase productivity. The Belfast Chamber of Commerce, on behalf of the business community has protested very vigorously about this closure. Registration is important for offices as are posting of parcels. The right hon. Gentleman has already dealt with franking. All these will be affected by the earlier closing. Perhaps the Assistant Postmaster-General can give some figures about the number of people using the post offices between half past five and six. This is a matter to be careful ly considered by the Post Office.
For the Post Office the year ahead will be of very great importance. I hope that much more information can flow to the House from the Postmaster-General and I wish him and his staff in this vital year the very best of good fortune.

2.28 p.m.

Mr. G. B. Drayson: The Bill is largely a financial Measure, but it has enabled us to have a general discussion about the Post Office and its services which we have all welcomed. I add my words of appreciation about the way in which the Christmas mail was handled by the Post Office this year. We have had some experience of delays in the mail, but this year it was probably handled more expeditiously than ever before.
The right hon. Gentleman stated that during the next 10 years he would be spending £1,500 million, and the Bill gives him additional borrowing powers.


up to £880 million. He said that in future the new Post Office Corporation would be operating entirely on commercial lines. No doubt the additional expenditure over and above the £880 million will have to be found by some system of self-financing. I would like to suggest that much of the new capital can be produced if the Post Office would pay a realistic rate of interest to its depositors.
The rate of 2½ per cent., which has existed for so long is quite out of line with modern rates of interest. At a time when we have a 7 per cent. Bank Rate, building society mortgages of over 7 per cent. and very little likelihood of the Bank Rate dropping below 5 per cent. during the next four or five years, the rate of interest paid to Post Office depositors is quite derisory.
The Postmaster-General, in his self-financing activities could make a considerable contribution to them if he would give depositors a square deal and pay them the correct commercial rate of interest for their money. As we have been discussing the giro system I assume that there will in future be two types of deposit accounts, made up of those which receive no interest and operate on the giro system and those which are deposits for a longer term, and not used for commercial or personnel purposes, but for making remittances. These longer-term deposits should receive a fair rate of interest.
We were very glad to hear that at least 83 per cent. of the mail is delivered on the following day.

Mr. Edward Short: Ninety-three per cent.

Mr. Drayson: That is even better. That is a very fine achievement indeed.
Can the Postmaster-General, in his international discussions on postal services and communications, include comments to his opposite numbers in continental countries about the delays experienced In receiving their letters and postcards from overseas? I refer particularly to those postcards sent by groups of people on holiday abroad, often schoolchildren and students, in parties organised by educational establishments.
These individuals go abroad with the injunction from their parents that they must send a postcard to indicate their safe arrival. It has been the experience

of many people in the past that a traveller has returned from his holiday before the postcard or letter arrives indicating that all is well. I have had instances brought to my attention by parents, who have written in great anxiety to me. In turn, I have drawn the Postmaster-General's attention to this. The worst offenders in this matter are the countries in Eastern Europe, where there are unaccountable delays in postcards, often posted in the capital of the country.
If we could convey to some of these people the unfortunate impression that these delays create in the minds of people who have nothing but good will for the country concerned, then they might take it to heart and see if they could not speed up their postal deliveries. It used to be said, and probably still is, that one judged the efficiency and character of a nation by the punctuality of its trains and its postal deliveries. There is a great deal of room for improvement in some countries, and I feel that if the Postmaster-General, in the discussions that he has talked of, could drop a hint here and there, it would be greatly appreciated.
May I ask if we could not have a rest, for a little while, from the constant issues of new stamps? They are all very picturesque and no doubt exciting, but they make one wonder whether we are becoming a sort of Ruritanian republic, trying to scrape the barrel to raise a few extra thousand pounds from abroad to supplement our foreign currency reserves. Perhaps the right hon. Gentleman or his hon. Friend the Assistant Postmaster-General could tell us what the programme is for 1967? How many different colours and new sizes in stamps can we expect? People would appreciate it very much if we could have a rest from them and get used to one set of colours and sizes before launching out into any more philatelic experiments.
Will any additional amounts from these vast sums of money to be borrowed be made available for rural telephone services? In the type of constituency that I represent this is a matter of some importance. We appreciate that the squeeze has cut down some hoped-for developments, but this is an essential service in these areas, and I hope that we will get an assurance that more will be done. I would like to see the remuneration of


sub-postmasters and postmistresses; increased. They perform a valuable service, often in conjunction with a small shop which is experiencing difficulties competing with supermarkets. Any additional income would be greatly appreciated.
Does the Postmaster-General really think that it is in the national interest to press ahead with coloured television? When we hear of delays experienced in getting telephonic equipment—9,000 contracts were delayed in delivery—when we know of all the other essential things required, in housing, health and education, does he really think that this is an appropriate time to devote any part of our national effort or skill in electronics and engineering towards this luxury, for which we could well wait?
I would rather see a reduction in the cost of existing television sets and more people being able to acquire them, rather than people having to pay £200 or £300 for this piece of equipment which can only add to the difficulties of people when they are paying for other things which they have acquired. This will only lead to a "keeping up with the Joneses" attitude. A great deal more could be done in providing television services for schools. This is a most valuable aid to education and I would like to think that this matter will be looked at again to see if we have our priorities right.

1.38 p.m.

Mr. Ian Gilmour: My hon. Friend the Member for Skipton (Mr. Drayson), like all other hon. Members on both sides of the House has praised the way in which postal workers carry out their duties. On that, both sides of the House are agreed, and it is presumably because of that agreement that the hon. Member for Gateshead, West (Mr. Randall) has not thought it necessary to give us any of his amiable advocacy.

Mr. Randall: One of my difficulties is that I am serving on the Select Committee on Nationalised Industries making this exhaustive inquiry into the Post Office, and I am a little apprehensive as to whether I should join in the debate. I find it very irritating to sit here but I have been fortunate in being able to make one or two interventions, which have assisted.

Mr. Gilmour: We are glad that the hon. Member has not maintained total silence. We appreciate the way in which the Post Office workers do their job, and when we criticise the Post Office we are not criticising the postal workers; we are criticising the Postmaster-General and the Government.
The Bill allows the Post Office to borrow £900 million over a period of about four years, which is the equivalent of about £70 for every family of four in the country. It is astonishing that this vast increase in expenditure will not lead to a spectacular increase in the quality of the services provided for those families. Presumably the need for this money to be borrowed was known last March when the White Paper was issued and last July when the Accounts and Report were submitted to the House. I imagine that the forecasts in those documents still hold roughly good and are not superseded by the Bill. In paragraph 73 of the Report we read that, despite the enlarged investment programme, the overall quality of the telephone service is not likely to improve. In view of the present policy, that is a strikingly dismal prospect.
The Postmaster-General talked about global satellites. That was all very exciting. Global satellites are all very well for round-the-world communications, but the non-global communications between Westminster and the rest of London or between London and the rest of the country also have considerable importance. When, two stones' throw from the House, a subscriber gets a 25 per cent. failure rate in his telephone calls and apparently the Post Office does not find that very remarkable, it calls for comment. Admittedly the Post Office claims that 5 per cent. of these failures are due to things being done incorrectly by the subscriber—perhaps not waiting for the dialling tone or not keeping his finger in the dial. These seem to me excessively flimsy excuses. Even if that 5 per cent. is granted, it still leaves a 20 per cent. failure rate, which is surely a ridiculously high level.
We also find that in many parts of the country people are sent telephone bills which are wrong. People have the uncertainty whether they will get the right number and then the uncertainty whether they will be charged the right price. It seems rather hard on the public


in those parts of the country that the Post Office first gives them the wrong number and then charges them the wrong amount.
Last year the waiting list for telephones rose by more than 100 per cent. from 46,000 to 96,000. Sometimes I think that those who have telephones must envy those who are only on the waiting list, because those on the waiting list do not realise some of the frustrations to which subscribers are subjected. But I imagine that it is not part of the Postmaster-General's policy to cut down the waiting list by making the service so unsatisfactory that people do not want it. I therefore hope that he will take steps to deal with this increase in the number on the waiting list.
Far too many people are still forced to be on party lines, and in my view the rent for sharing a line is relatively far too high. Anyone who has ever had to share a party line knows how irritating and inconvenient it is, and it seems to me that there should be a far greater differential between the rent of a party line and the rent of a separate line.
The Assistant Postmaster-General will have his work cut out to answer all the queries which have been addressed to him today by my hon. Friends, and I do not want to add unduly to his burden. But one of the problems with the telephone service is the physical problem of building sites and speeding construction work. Will he tell us whether a start will have been made by April on the 40 new post offices and the 20 new sorting offices mentioned in the White Paper? I hope that he will be able to assure us that those projects did not receive the chop last July.
Another physical problem is that of the supply of exchange and telecommunications equipment to the Post Office, which my hon. Friend the Member for Belfast, North (Mr. Stratton Mills) mentioned. We have read in the Press that the first customer of the I.R.C. is to be the firms which supply the Post Office with its equipment. I am surprised that the Postmaster-General did not talk about that today. Both my hon. Friend the Member for Howden (Mr. Bryan) and my hon. Friend the Member for Belfast, North, asked for more information about the Post Office. Is the Press report—which appears to be inspired—true? Is it true

that the I.R.C. report will not be published? If that is so, why is it so? What does the Postmaster-General envisage coming out of this inquiry? Will the I.R.C. impose a complete monopoly here? If so, that would be highly undesirable, for this part of the industry needs more competition, not less. I hope that the right hon. Gentleman's evident dislike of competition will not lead him to favour a monopoly here.
One other problem concerns manpower in the postal services. Again, the Postmaster-General did not mention it. He failed to mention the outcome of his talks with the union. He did not say how they are progressing. Presumably that means that the talks have not been very successful—or perhaps he has been too busy trying to get rid of the pirate radio stations even to hold the talks. Obviously this is an important point. The White Paper stated that a greater use of part timers would make a useful saving and would lead to increased efficiency. As the Postmaster-General is being provided with such enormous sums of money, he owes it to the public to see that there is an intelligent use of manpower in the Post Office. I hope that the union has been or will be adopting a rational and totally unobstructive attitude on this point. Perhaps the Assistant Postmaster-General will tell us about that.
In the Report, the Post Office admitted that the quality of the service declined in 1965–66, and the Report also showed there was no great hope of improvement. We were therefore glad to hear the Postmaster-General say today that there had been some improvement in the service. That appears to have been due to the industrial stagnation and to the large numbers of unemployed, and it is a melancholy thought that the postal services are to be properly run only when there are several hundred thousand unemployed.
The Postmaster-General is almost uniquely privileged. He has been given vast borrowing powers. He was allowed to increase his charges last summer and autumn when no one else was allowed to increase charges. Thus we have increased charges and increased capital and not yet an improving service. The Post Office says that it is not stimulating demand, no doubt because it could not meet that increased demand. The Bill is therefore


not providing a vast sum of money for a great leap forward. It is providing money for a great leap just to stay where we are and to avoid a leap backwards. That is certainly not a very exhilarating prospect, and it represents a failure on the part of the Postmaster-General and the Government.

1.49 p.m.

The Assistant Postmaster-General (Mr. Joseph Slater): First, I should like to congratulate the hon. Member for Norfolk, Central (Mr. Ian Gilmour) on having been privileged to close the debate on behalf of the Opposition, although I cannot say "Amen" or "Good Fortune" to the attitude which he adopted in his speech. It was made with a high sense of criticism of the operation of the service.
Even so, we have had a very interesting debate and the speeches which have been made have ranged over a very wide field. This is understandable when we are debating a Bill of this nature. In my opinion the main purposes of the Bill were dealt with very efficiently by my right hon. Friend in his most interesting speech on the Post Office. An organisation such as the Post Office, which provides so many forms of service to the general public, is bound to come in for a great deal of criticism. Postmasters-General and Assistant Postmasters-General over the years have stood at this box defending the Post Office against attacks which have been made on it from both inside and outside the House of Commons. I make no apologly for doing likewise. After all, my right hon. Friend, who carries the main responsibility for this organisation, has never at any time sought to prove that there were no defects in the services we provide or in their administration. Nor do we take exception to criticism, from wherever it comes. Indeed, the number and variety of speeches made today show the interest which hon. Members take in the affairs of the Post Office.
This is borne out by the number of letters which my right hon. Friend and I receive from hon. Members on behalf of their constituents. I have no doubt—and I do not say this in a critical way—that if many of the complaints that come to us were passed on immediately by the complainants to the postmaster or

telephone manager, they would receive immediate attention. It is part of their job to assist where they can in the Post Office services for which they are responsible. Hon. Members are most welcome at any time to visit any of our offices.
We are sometimes apt to overlook the fact that those who are responsible for running these services—whether in the delivery of mail or whatever other position they hold—are units of society just as we are and desire the best for the areas in which they live and work. Having said that, I would not seek to diminish my responsibility as a Minister for the Post Office, and I will try, in answering the debate, to deal with as many of the questions and criticisms raised by hon. Members in the time available to me.
My hon. and learned Friend the Member for Northampton (Mr. Paget) raised two important points, one of them about betting and the other telephone contracts. I give him the undertaking that I shall look into those matters and see that he receives a reply.
The hon. Member for Howden (Mr. Bryan) raised a number of important issues, although—and he is a past master at this—he introduced a number of red herrings which he will not expect me to follow up. My right hon. Friend dealt with one most effectively by making it clear that he is not responsible for the publication of the Select Committee on Nationalised Industries' Report on the Post Office. The same applies to broadcasting, and particularly the question of local radio. After all, the Post Office does not invest capital in the broadcasting services. Thus, these matters are not only far removed from the Bill but are also more appropriate for debate on another occasion. Having said that, I thank the hon. Member for Howden for the gracious tribute which he and other hon. Members paid to the Post Office. Those who work for the Post Office are extremely hard working and loyal and they will be heartened by the knowledge that they have the admiration of the House as a whole.
As for the self-examination referred to in last year's Report and Accounts, that was related primarily to the considerable work put into the evidence which the Select Committee required if it was adequately to investigate the Post Office. My right hon. Friend pointed out that


there is always room for improvement in an organisation as big as the Post Office. A continuing programme of work study is going on into every activity to try to simplify procedures, to make our techniques and practices more efficient and to get the best of both worlds by improving the services offered to the public and, at the same time, by cutting down costs.
The effort that is put into this work is reflected in a variety of ways. At one end of the scale we have reduced the number of men needed to instal telephones and in future we will not need different teams to handle each part of an installation job, so that the service will be given more speedily. At the other end of the scale, office procedures are being simplified and cheapened and, to this end, we are cutting out all but the essential records and are introducing more sophisticated office machinery. Technological developments are also contributing to plant efficiency.
The Post Office E.D.C. is working well and actively although its affairs are, perhaps, more a matter for its Chairman than for my right hon. Friend. Similarly, the Post Office Users' Council is extremely busy, but it is an independent body to which my right hon. Friend cannot dictate, although he would not desire to do so. The survey of public opinion which was taken last year showed that the public is reasonably satisfied with the postal services. A survey in greater depth and covering in particular the two-tier idea is now under way.
I was glad to hear the hon. Member for Howden reiterate his support in principle for the translation of the Post Office to public corporation status. It is wrong, however, for him to imply that the Minister responsible for the Post Office will be glad to be relieved of Parliamentary accountability. That is far from the case. What my right hon. Friend had in mind in his statement of 3rd August last year was that the Post Office would be able to concentrate on the real job of providing an efficient service if Parliament did not concern itself with the day to day minutiae of the service. The Minister will, of course remain answerable to Parliament in a number of ways, the Corporation will be liable to investigation by the Select Committee on Nationalised Industries and its accounts will be subject to examination by the Public Accounts Committee.
My right hon. Friend certainly does not envisage the Corporation being shielded from the effects of competition. Indeed, there will be fierce and open competition on giro and we will be providing a complementary current account banking service to the services provided by the commercial banks. As for the effect of the change in terms of the status of the staff, this is being discussed with representatives of the staff and hon. Members will, therefore, appreciate that it would be premature for me to say any more on this issue at this stage.
The recruitment position is better than it was, although there are still difficulties, particularly in London, the Home Counties and the Midlands. The number of vacancies for postmen varies between 4 per cent. and 6 per cent. of establishment at different offices and the number of vacancies for counter staff varies from 3 per cent. to 13 per cent. Public coding will certainly speed the mail and it will be in the customers' interest to use the code so that the mail does not have to be diverted and handled by the slower manual processes.

Mr. Bryan: I was interested in the figures given by the hon. Gentleman. Do they reveal an improving tendency over, say, the last three months?

Mr. Slater: Yes, but not so much in London.
The telephone waiting list has been stabilised at about 125,000 by the restraining effects of the change in telephone rental and other economic measures. Of these, about 24,000 have been waiting for more than six months. In this connection, to answer the question about electronic exchanges, these have only just gone into production and one can only hazard an estimate of the time their installation would take. Obviously the time involved would depend on the size and complexity of the exchange, and average figures tend to be misleading. The hon. Member and the House may rest assured that we are doing all we can to keep down the time intervals by the use of critical path analysis and all modern techniques.
My hon. Friend the Member for Bristol, North-East (Mr. Dobson) raised a very important point about consulting


the staff on the change in status of the Post Office. My right hon. Friend reassured him in an intervention on this point. My hon. Friend also asked whether we could give a regular progress report to staffs about the change. My right hon. Friend has explained that final decisions on the form of the reorganisation and the internal structure of the Corporation must await publication of the Report of the Select Committee on Nationalised Industries. My right hon. Friend has also told the House that we have asked Messrs. McKinsey to advise on certain aspects of the reorganisation.
There is not much more I can say on this particular issue, but I shall look into the point made by my hon. Friend the Member for Bristol, North-East about the 1931 rules and I shall write to him. I assure him that postal mechanisation is being very thoroughly thought-out and planned and we are taking the unions along with us in this. I assure him that we are not overlooking the possibility of central point delivery. My hon. Friend also raised a point about the experiment we are conducting in helping people through the Citizens Advice Bureaux. This started in the rural areas of Bedford, Ulverston and the Wrekin on 7th November. It is too early to say whether it will be successful, but we sincerely hope that it will be.
We have not yet reached a conclusion about the value of equipment on trial in communications for the house-bound. There have been some technical problems and also problems in finding people to co-operate by acting as contacts for aged people. I hope that we shall reach a conclusion on this soon. My right hon. Friend has already told the House that he intends to set up a research fellowship to examine how the Post Office can help with communications for the housebound.
The hon. Member for Wembley, South (Sir R. Russell) spoke about the change of hours at Crown post offices. Before the change, the hours were 8.30 a.m. to 6 p.m. from Monday to Saturday. Now they are normally 9 a.m. to 5.30 p.m. from Monday to Friday and 9 a.m. to 4.30 p.m. on Saturday. We are making exceptions in some cases. For example, the busiest offices in major cities may open

for longer time than the hours I have mentioned. In commercial and business areas of cities where a greater number of post offices is needed from Monday to Friday than on Saturday, some of the counters close on Saturday afternoon and a few for the whole of Saturday. In small towns and residential suburbs where most shops close for lunch, our counters may now close for an hour at lunch time provided the amount of business done has been small. We have not yet completed these changes. They were introduced at most offices in England, except the North-East Region, and in Wales last year, but they are now being made in Scotland, Northern Ireland and the North-East regions.
Returning to the point raised by the hon. Member for Wembley, South we already have 1,800 Crown post offices staffed by civil servants and about 23,000 offices run on an agency basis by sub-postmasters with whom we are able to share overheads and therefore provide post office counters on a much more generous scale than would otherwise be possible. Nevertheless, each additional counter opened adds to the cost without increasing the business. Our aim is to maintain a balance between costs and the reasonable needs of the public. I do not know off-hand what are the merits of the case which he raised, but I will write to the hon. Member after reading what he said.
The hon. Member mentioned the quality of the parcel post. I am glad to say that it is better than it was and 74 per cent. of all parcels are delivered within two working days of posting. It is still not so good as it should be, but we are working hard with British Railways with a view to improving the service. I have noted what the hon. Member said about Wembley head post office's difficulties of accommodation, but I am afraid that I cannot deal with that matter off the cuff. I shall certainly look into it, find what the position is, and see that information is conveyed to him. On the more general question of Post Office slowness in getting new premises, we must realise that it is not always easy to find buildings which are suitable for our specialised needs. We are a public service and cannot afford to pay exhorbitant prices. These are the natural restraints of our public service position.
The hon. Member for Moray and Nairn (Mr. G. Campbell) raised questions about the important new giro service. He was followed and supported by the hon. Members for Cheadle (Dr. Winstanley) and for Belfast, North (Mr. Stratton Mills). I shall not be able to reply to all that has been said in this regard, but I shall read it carefully and will write to the hon. Members.
The six areas chosen for test advertising were those towns where a local newspaper has complete coverage. They are sample towns, not representative of areas of the country. As to the minimum of 5s. for transfers, market research has demonstrated that there is no public demand for a lower minimum, and many people pay great heed to what market research says. No institutions nor anyone else has objected to a minimum of 5s. per transfer. What kind of payment will companies wish to collect by giro of less than 5s.? Postal orders are widely welcomed for low value payments by the public. We must have the right to close the giro account to protect other giro users, not the Post Office. Other countries—for example, France—have the same right. Banks have exactly the same right and exercise it. We cannot accept the idea of a tribunal to judge us.

Dr. Winstanley: The hon. Gentleman says that the banks have the same rule but I remind him that this is not so. Banks are required by legal precedent to give seven days' notice of closure of an account. We are not disputing the right of the giro to close an account but merely saying that it should give a minimum period of notice.

Mr. Slater: I shall look into what the hon. Member has said. The idea of a tribunal would prevent us from doing exactly what the banks do if we are to run a current account banking service. I emphasise that giro will not be a monopoly. It will exist in free competion side by side with commercial banks. The option on statements, to which the hon. Member referred, will remain.

Mr. G. Campbell: On the question of the minimum amount of 5s. it may be that it is because the system is new that potential users have not yet understood it. If later objections are raised to this minimum would the Government be prepared to consider changing it?

Mr. Slater: The Government are always prepared to have another look at anything if it is in the interests of the general public. I must leave it at that at the moment. I hope that we have gone some way to convince the hon. Member that we have considered carefully and fully all the aspects of the new giro service, and that we are confident that it will be a success and a valuable service for the public and commerce. But, as I have said, I shall read carefully what he said and write to him because I know and appreciate his great interest in this new service. When we debated this issue in the first instance, I think that he was the only Member who had experience of being a customer of a giro.
I should like to deal with two other points which hon. Members have raised about the giro service. The hon. Member for Cheadle suggested that the joint stock clearing banks are under a legal obligation to give customers at least seven days' notice before closing an account. Therefore, he considered that a national giro system should be placed under a similar obligation. I cannot see that there can be any such legal obligation. The banks have no form of written contract with their account holders and it therefore seems most unlikely that they should be under any such obligation. The comparison which the hon. Member sought to apply to the giro service does not hold water.
?
The hon. Gentleman said that it would not be possible for giro account owners to make deposits and withdrawals through every one of the 23,000 sub-post offices. This is correct. But the number involved will be only a very small percentage of the total. There are certain offices which do not, for example, transact Post Office Savings Bank business. I cannot accept that there will be any shortage of post offices available for giro users or that they will have any difficulty in operating their accounts. Nevertheless, should any difficulties come to light when the giro gets under way, we shall be most willing to consider them because we are very anxious that this exciting new enterprise should be a complete success.

Dr. Winstanley: Would the hon. Gentleman clarify one remark which he made? It appeared from what he said about the fact that there are certain


post offices which do not conduct Post Office Savings Bank business that he was suggesting that the giro system will be available in all post offices where Post Office Savings Bank business is conducted. Would he confirm that that is correct?

Mr. Slater: I shall go into every point which the hon. Gentleman has raised on this issue because I know of his interest in this subject and we want to get the matter as clear-cut as possible in the interests of the customer and in the interests of the service.
The contrast pictured by the hon. Member for Belfast, North between the two main activities of the Post Office is well judged. Posts and telecommunications are two great and vastly different enterprises—one essentially labour intensive and the other technically progressive and intensively capitalised. However, he need have no fear that this contrast will inhibit the development of the services, for one of the cardinal points of Post Office policy is that the two are, and will be, treated separately in all respects.
I have waited until now to deal with the point raised by the hon. Member for Howden about information. There will be no formal report from McKinsey. They make their recommendations as they go along, the Post Office considers them, and if it seems worth while the Post Office discusses them with the staff with a view to their implementation in the most effective way. I can assure the hon. Members for Howden and Belfast, North that the framework within which the new Corporation will be constructed will be clearly delineated in the White Paper which my right hon. Friend has promised, together with the essential features of his proposals.
As regards the points made about tariffs by both hon. Members, the increased postal charges announced in July last year were fully debated in the House on 9th November last and therefore I do not intend to deal with them again today. On the point made by the hon. Member for Belfast, North about the heavy loss made in some sectors, the cases to which he referred involve relatively little revenue. But I take his point

that he thinks that our charges should be more closely related to costs. I agree with him on that.
My right hon. Friend gave the reasons for our working towards shorter hours of counter business. I understand that the hon. Member for Belfast, North has three Questions down for answer on this. I am looking into the points which he raised and will be replying to him next week.
The hon. Member for Skipton (Mr. Drayson) raised the question of postcards posted from overseas. As I am sure the hon. Gentleman knows, my right hon. Friend is not responsible for services in other countries, but we constantly represent in all our contacts with other countries the need for a speedy service. We lose no time in handling these postcards when they reach this country.
Hon. Members raised one or two points on, for example, the Post Office Savings Bank and television which, although they fall within my right hon. Friend's responsibility, are not financed by the money for which we are asking in the Bill.
In conclusion, may I say how glad I am that we have had such an interesting and valuable debate. I feel sure that, although there has been a measure of criticism—not too much—there remains among hon. Members and the public a vast fund of good will for the Post Office which has been built up through many years of unstinted and devoted service by Post Office servants. Clearly, we have serious difficulties to overcome in an organisation such as ours which is so dependent on labour, in an economy in which labour is already in short supply. But in a changing society, the Post Office must continue to adapt its services to its customers' needs and, in so doing, preserve the fund of good will which is our heritage.
Although I have not been able to deal with all the points raised, I shall read carefully what hon. Members have said and will write to them about matters with which I have not dealt today.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Grey.]

Committee upon Monday next.

POST OFFICE (BORROWING POWERS) [MONEY]

Queen's Recommendation having been signified,—

Motion made, and Quėstion proposed.
That, for the purposes of any Act of this Session to increase the limits imposed by section 10(2) of the Post Office Act 1961, it is expedient to authorise such increases in the sums which by or under any enactment are to be or may be charged on or issued out of the Consolidated Fund, raised by borrowing or paid into the Exchequer as may result from increasing to £2,200 million the amount which, under the said section 10(2), the aggregate therein mentioned is not to exceed.—[Mr. Short.]

Mr. Deputy Speaker (Sir Eric Fletcher): I should remind the House of important changes in its financial procedure which the House agreed to at the end of the procedure debate on 14th December last. The House then amended Standing Order No. 83 which had governed proceedings relating to public money since the year 1707. As a result of the amendment then made, instead of the House now adjourning into a Committee, we move directly as a House to consideration of the Money Resolution.
I think that this is the first occasion on which the House has considered a Motion proposing financial expenditure by the Crown without the matter having been first considered in, and reported from, a Committee of the whole House.
By a further subsidiary change in practice, the Queen's Recommendation has today, for the first time, been signified through the Public Bill Office instead of, as hitherto, announced publicly in the House by a Minister.

Question put and agreed to.

EXPORT GUARANTEES BILL

Order for Second Reading read.

2.20 p.m.

The Minister of State, Board of Trade (Mr. George Darling): I beg to move, That the Bill be now read a Second time.
This is a simple Bill which increases the authority of the Export Credits Guarantee Department for a purpose which, I know, will commend itself to all sections of the House—the provision

of insurance against the major risks of exporting.
The existing Act set limits to the liabilities which the E.C.G.D. may incur and the Bill seeks to increase these limits to provide for the Department's expanding business. The limits have got to be raised because exports are increasing at a fairly high rate. Exports in the last quarter of last year were about 20 per cent. up on the last quarter of 1964, which is a gratifying increase and amounts to about £70 million a month in value. In addition, the proportion of exports covered by E.C.G.D. insurance is itself increasing. These two factors will result in the present limit for insurance in commercial credits being reached in April, in less than three months' time.
There are two points that I ought to make right away. First, the Export Credits Guarantee Department is intended to operate on a self-supporting basis and has so far been very successful in not incurring any financial losses to be met out of public funds. In fact, there is no reason to suppose that the expansion provided for in this Bill will result in any expenditure of public money. Secondly, these statutory limits to the Department's operations, which rightly provide a useful measure of Parliamentary control, have never in the past caused the Department to turn away any business that was otherwise insurable.
Turning to the provisions of the Bill, the House will know that the Export Credits Guarantee Department's main business is classified according to whether it falls under Section 1 or Section 2 of the original Act of 1949. There were three Sections to that Act, but Section 3, which relates mainly to tied loans to overseas countries, is now inactive because this role has been taken over by the Ministry of Overseas Development, although, of course, existing loans will remain on the books until they are finally repaid.
Dealing, first, with the Section 1 provisions, business under this Section is commonly known as commercial business because it has the recommendation of the Department's Advisory Council that it regards the business as sound by a commercial yardstick. The present liability for this class of business under the 1964


Act is £1,500 million. The Bill raises the limit, if the House agrees, to £2,400 million. At the end of December the actual liabilities under this Section amounted to almost £1,400 million, and at the present rate of increase in the Department's business these liabilities would, as I have said, reach the ceiling by April, in less than three months. In addition, there are further contingent liabilities of about £33 million, so that it will be readily seen that the need for the Bill is rather pressing.
Turning to the Section 2 provisions, Section 2 of the original Act provides for business to be done in the national interest, and that is how this business under Section 2 is generally described. It is the business which does not have the backing on commercial grounds of the Advisory Council, but which, nevertheless, the Government consider can and should be undertaken. It is not unsound business. It is business which is somewhat riskier than the business that comes under Section 1, and the Department's underwriting judgment is still effectively applied here.
So far these operations, like Section 1 activities, have produced a modest surplus—modest, that is, in relation to the size of the business that is conducted and in relation to the Department's liabilities. The present limit under the 1964 Act—that is, for Section 2—is £1,300 million. In this Bill we provide for this to be raised to £1,500 million. At the end of December the actual liabilities here under this Section were £728 million and there were further contingent liabilities of about £136 million. It will be seen that these figures themselves do not suggest that there is any immediate need to raise the limits for insurance cover on Section 2 business.
But we are here concerned with the question of timing. We can assess and estimate the possible rate of growth of exports and the increase that is required in credit guarantees in the years ahead based on the present rate of increase. The real question is: how far ahead shall we go in seeking Parliamentary approval for the limits of this credit insurance? I must explain, therefore, in general terms how the figures in this Bill have been arrived at. As the Department's business has increased over

the years there have been successive Acts to amend the limits, in 1952, 1957, 1959, 1961 and 1964. The House, I know, welcomes opportunities to review the work of this Department, and in introducing the 1964 Bill the previous Government fixed the limits in such a way that they expected the Bill to run on for about five years, though, of course, it was made clear at the time that circumstances might shorten this period.
In the event, we have run for three years because of the expansion of exports and the expansion in the Department's coverage of the exports. This expansion is due in part, I am sure, to improvements in the Department's facilities over this period. Anyhow, we now have to consider how long we wish the present Bill to last and to make forecasts on that basis. We have considered this very carefully and propose again to provide for five years ahead on the basis of the recent growth rates. If the rate of growth continues to increase, it will be necessary to come to the House sooner, but I am sure, hon. Members will agree, to come to the House in a very good cause.
Since the beginning of 1965, Section 1 business has increased at a rate of about £170 million a year and it is by projecting this over five years that we arrive at the increase proposed, which is an increase from £1,500 million to £2,400 million. Section 2 business, composed of various and sometimes dissimilar forms of cover, is very difficult to forecast. We expect the financial guarantees for long-term financing to increase at about the present rate of around £100 million a year. There could well be more markets in the next few years that are, perhaps, too chancy for Section 1 cover. We may have to cover, for instance, special kinds of business such as the sale of military equipment and the possible sales of Concord aircraft.?
Taking it all together, We are providing for an increase in liability under this Section of £125 million a year. That is about £650 million in five years, if my arithmetic is correct. As our current and potential liabilities are around only £850 million, we still have considerable room within the present limit. We shall probably need an increase of only about £200 million, and therefore we are bringing the figure up to £1,500 million, which is the figure in the Bill.
These, briefly, are the provisions of the Bill, which will enable the Department to continue its very valuable work in encouraging exports, with no foreseeable expense to the taxpayer.
I turn briefly to the work of the E.C.G.D. itself. At the end of the last financial year, the Department had cumulative surpluses on the Section 1 account of about £60 million and on the Section 2 account of about £19 million. Over the past two years it has been able to reduce premium incomes on average by roughly 25 per cent. I am sure that hon. Members will agree that these are welcome and gratifying developments.
The most important fact—as I am sure that all hon. Members will agree—is that the Export Credits Guarantee Department provides our exporters with the best credit insurance system in the world. Certainly, it is the most envied and the most copied system. We may not hear praise of this kind given to the activities of the Department, but hon. Members who have travelled abroad, as I have been able to do during the last few years, and who have listened to foreign businessmen talking about our methods of financing export credits, of giving credit insurance, will agree that our arrangements, at any rate, are greatly appreciated abroad.
Since the present Government took office we have done quite a lot to broaden and cheapen the facilities which the Department makes available. I have already mentioned the premium reductions. In addition, the basic percentage of cover on buyer risks has been raised from 85 per cent. to 90 per cent. The minimum credit period for specific bank guarantees, which, I suppose, one can describe as the passport for financing on favourable terms, has been lowered from three years to two years. The £100,000 minimum contract value has been progressively lowered and has now been completely eliminated. For bill business below two year's credit, a completely new guarantee for financing banks has been worked out with the clearing banks and is now in full operation.
It is part of our national character that we are all too ready to publicise our mistakes and our shortcomings. Particularly in the field of exports, we should do a great deal more to publicise our achievements. There is no doubt

that the E.C.G.D. has served the nation, the exporters, and the business interests very well indeed. I am sure that I will have the support of all hon. Members in paying a well-deserved tribute to the staff of the Department and to the chairman, Sir John Hogg, and the members of the Advisory Council.
Even though the praise is well deserved, we should not fall into complacency. It is not sufficient to feel that we are keeping ahead of our rivals overseas. We have to do everything possible to help our exporters. Debates on previous Bills have provided the House with an opportunity to review the general workings of the Department, and although the attendance in the House today does not suggest that there will be a lengthy debate, I am sure that those hon. Members who are present will want to say something about the work of the Department.
We shall study very carefully all that may be said, and I will do my best to answer any questions which may be raised relating to the work of the Department.

2.34 p.m.

Mr. Terence L. Higgins: We on this side of the House certainly welcome the Bill, which raises the limit under Section 1 of the 1949 Act from £1,500 million to £2,400 million, and the limit under Section 2 from £1,300 million to £1,500 million.
My right hon. Friend the Member for Taunton (Mr. du Cann), in proposing a somewhat similar measure on 15th January, 1964, which established the present limits pointed out, as the right hon. Gentleman has said, that it was expected that the limits might last for five years. He went on to envisage the possibility that they might not be adequate and said that if a further request were made to Parliament for a new extension of the limits before 1969, and it was proved to be the case, it would be further proof of the E.C.G.D.'s progress and usefulness. He would not have complained were that the case, and nor would the House.
As I say, we are certainly prepared to support the Measure, which reflects the increase in business which the E.C.G.D. is doing. Indeed, the pressure on the limits reflects three things. First, the increase in inflation and the decline in


the value of money, because the limits are expressed in many terms. We do not welcome that, but we welcome the fact that exports have increased somewhat, and that the share of those exports which is covered by E.C.G.D. has increased, also.
The support given to the Bill reflects the fundamental recognition by those on this side of the House of the vital importance of exports, because in our present economic situation exports and the balance of payments are an effective restraint on the rate of growth in this country. If we can export more, it is reasonable to suppose that we can operate the economy at a higher level of activity than would otherwise be the case
When one looks at the fact that the policies of the present Government have made it necessary to reduce the level of activity in the country, one can reasonably say that the need for greater exports is more necessary now than it has been at any time since the Second World War. On this, I should like to make one particular point. While this measure does indeed facilitate exports, by covering the credit which exporters need in order to make their sales, there are certain other measures which are run contrary to this policy.
At pages 31 and 32 of the booklet on the E.C.G.D., which is available, considerable stress is laid on the fact that, even with the best will in the world, the complexity of the paper work involved in exporting is very great indeed. Yet we find that because of the imposition of the Selective Employment Tax which falls on people engaged on a large amount of paper work, as a service industry, the cost of implementing the measures which are covered by the Bill have been increased. This is even more so because of the rigid adherence which the Minister of Labour is showing towards the standard industrial classification basis for the Selective Employment Tax and which applies also to warehouses. We should realise, therefore, that Government policy is verging in two different directions, and there is considerable scope for helping our exporters to compete on overseas markets.
The right hon. Gentleman was a little optimistic in quoting from a selective

set of figures for the last quarter of the year showing that exports had gone up significantly later. I prefer the latest figures of the Board of Trade Journal published in December which show that the United Kingdom is still at the bottom of the export league. But that is in no way due to the work which the E.C.G.D. has been doing under its chairman, Sir John Hogg, and I am happy to join with the right hon. Gentleman in congratulating the E.C.G.D. on its work.
We also recognise the fact that regarding Section 1, we are rapidly approaching the limit which has been set in the previous legislation, and there is need to introduce this Bill without delay. As this is the only opportunity on which one normally has the opportunity to discuss the work of the E.C.G.D., I should like to make one or two specific points, and to say what an excellent booklet is the one that was revised in April last year and which is available in the Library.
The 1949 Act, as the hon. Gentleman pointed out, is divided into three sections. I wish, first, to deal with one or two points which arise under Section 1, on what the right hon. Gentleman calls the commercial credit insurance side, which I understand is 94 per cent. or 95 per cent. of the total business which the E.C.G.D. carries out. There is a little confusion here, because the matter is described throughout as insurance, which normally one would expect to be done on an actuarial basis with the rates calculated on the basis of actuarial tables, but this is not so. They are calculated on the basis of estimates which are made by the Advisory Committee. The fact that it has been possible to reduce premiums and also to extend insurance reflects the accuracy with which these gentlemen have forecast extremely difficult economic variables. It is not, however, an actuarial basis. It is merely that an attempt is made to break even or to make a slight profit on the operations.
I wish to turn to the question of small exporters. This appears to be an area in which the premium differs considerably from the premium which is charged to large exporters. I think that it would be true to say that the current premiums are on average something like 5s. per cent. under this section, but that the


premiums charged to small exporters is about 11s. 6d. This appears to be a considerable variation which would tend to tell against the small exporter. Can the Minister say why there is such a large difference in premium? One might have thought that the lumpier the size of the operation, the bigger the risk rather than the smaller the risk when it is spread over a very large number of transactions by different firms.
It is not clear from the booklet what lower limit, if any, is imposed upon small exporters. Can any exporter, no matter how small, go to the E.C.G.D. for help and ask the Department to cover it? I have in mind a point which was suggested to me by my hon. Friend the Member for Maidstone (Mr. John Wells). Recently, apparently, a horticulturist was anxious to export some roses to Canada. They were certified by our Ministry of Agriculture, but when they got to Canada it was found that there might be some earth attaching to them and they had to be destroyed. As a result, the exporter lost the goods concerned and suffered a loss.
I should like to raise two general points on which I would like answers at the Minister's convenience. First, does an exporter get cover no matter how small the size of the export? Secondly, are risks of that kind involving action by other Governments also covered? We would like to have the position clarified.
My next point concerns the policy adopted by the E.C.G.D. to investments which are effectively leasing agreements. The Minister will be well aware that in certain countries there are tax advantages for particular firms by leasing rather than by buying equipment. There was, however, controversy during the last year or so concerning some exports by I.C.T. and, apparently, the E.C.G.D. did not feel able to cover the transaction. Was this because there is a general objection to financing leasing arrangements of this kind, or were there simply particular factors influencing the decision in the case in question?
I turn briefly to a related question concerning the cost of export credit. The E.C.G.D. has been instrumental in making arrangements with financial institutions in this country whereby credit is provided. I understand that on the shorter-term operations, credit is normally

made available, subject to certain conditions, at Bank Rate. Given that the Government underwrite the risk, it would seem not unreasonable that the credit should be available at the rate which the Government normally obtain.
As has been pointed out in previous debates of this kind—for example, in the debate on 15th January, 1964, by the present President of the Board of Trade when talking about the cost of export credit—
British interest rates for export credits are higher even now than comparable rates offered by Italy, Japan and … the American Export-Import Bank."—[OFFICIAL REPORT, 15th January, 1964; Vol. 687, c. 329.]
The right hon. Gentleman on that occasion raised the question, which was raised at a number of points in the debate, of whether the rate at which British exporters could obtain money when financing exports should not be at the same level at that which their competitors overseas can obtain it.
There seems to be strength in that argument because we in this country have suffered from a very high interest rate for a considerable time and, on a more general level, because the rate of interest in a country generally tends to be high when it is in balance of payment difficulties. This means, however, that the cost of its exports to go up at a time when it is in balance of payment difficulties and, therefore, one gets into a vicious circle.
In the light of this and of the Chancellor of the Exchequer's conference between various financial Ministers this weekend, there might be a case for considering whether the effect of differential interest rates on export prices should not be nullified or neutralised by some form of agreement. Perhaps this is a point which, even at this late stage before the conference, the Minister might feel deserving of attention. Certainly, the cost of interest rates raises a number of difficult questions, in particular whether one suddenly gets shifts in the source of finance for British exports from the market where they are being sold back to this country. This takes us into the difficult field of leads and lags in remittances.
I do not wish to weary the House on this matter this afternoon. Those who


are expert in it will be familiar with the problem and would agree that there may be a case—but it needs to be weighed carefully on both sides—for having the same rate of interest for all exporting countries. There are, of course, arguments the other way. I do not suggest that this is a cut-and-dried matter, but investigation into it would be justified.
I turn now to Section 1 of the 1949 Act and the question of special guarantees and national interest policy where the commercial risk is not even determined by the Advisory Council, but is simply a risk which the Treasury decides to undertake on its own initiative and on the view that this will be in the interest of the country as a whole.
Is sufficient attention given to the need to guarantee the costs of professional services? Very often our people may be represented in an overseas market by a consultant who makes an appraisal of a situation, and eventually the export order may come to a British firm. Other countries frequently have the two operations integrated. It is, therefore, important that the E.C.G.D. facilities should extend to professional services even when these are not directly related to a particular export order.
My second point under Section 2 is a question which is posed on page 21 of the booklet which states that the E.C.G.D. has gone to great lengths to find out what the risks are in individual countries, that this integral part of E.C.G.D. services is highly regarded and that many unrepresented exporters have asked whether they might be able to receive it. It is not clear from the booklet whether they can.
This is very important because exporters—and, indeed, investors—overseas too often make their decisions but eventually say that there are lots of imponderables in the exercise and they decide on balance not to export or invest, whereas if they had what has been shown by experience to be a reliable estimate of the risks—the risk of remittances being blocked for political reasons, for example—they would be in a better position than otherwise to make an objective appraisal of what the rate of return is likely to be from either the export or, alternatively, the foreign investment overseas. That

could be used both by exporters and investors overseas.
I now turn to Section 3 of the 1949 Act. I am somewhat puzzled by the right hon. Gentleman's statement that there were three Sections to that Act. I understand that there are three Sections to it and although the right hon. Gentleman said that it was now proposed to let Section 3 lapse that is not mentioned in the Explanatory Memorandum to the Bill. That raises some very important points. Hitherto, Section 3 of the 1949 Act has tended to cover loans to overseas countries, rather than guarantees to exporters to overseas countries, amounting on previous occasions, I gather, to about 25 per cent. of our total overseas aid programme.
We are now told that this is not to be covered under the 1949 Act, but to be carried under the Votes of the Ministry of Overseas Development. If so, the arrangement now proposed would seem to be singularly untidy. If he catches the eye of the Chair, my hon. Friend the Member for Dorking (Sir G. Sinclair) may have something further to say on that point.
If the responsibility for future transactions is to be transferred from the E.C.G.D. to the Ministry of Overseas Development, is there not a case for getting rid of section 3 of the 1949 Act and transferring the whole thing straight away to the Ministry? We should then know where we stand on the question of aid. To leave the residual of past aid investments under Section 3, plus one or two odd ones still awaiting final transfer under that legislation rather than under new legislation, would seem to be untidy, particularly because the purely financial side becomes rather confused if the arrangement the Government now propose is implemented.
What will happen in the future is that the total amount of loans under Section 3 will not increase, but the previous loans will gradually be repaid. That means that for goodness knows how many years hence the E.C.G.D. will keep getting odd bits of money paid back into it. I understand that at the end of each year they are all paid back to the Treasury anyway, so perhaps that is not very important in some ways. But it means that it will have a very odd balance sheet. On the one hand, there will be its liabilities which


are guaranteed by the Treasury—and we all hope that the Treasury will never have to meet them. On the other, there will be a flow of dribs and drabs of repayments of past loans, which will in one sense be the only items to appear on the assets side of the balance sheet. That is an odd way of legislating, but no doubt there are good reasons and I hope that the right hon. Gentleman will tell us then. If not, perhaps it will be possible to make some further arrangement in Committee.
My final point concerns the very great business E.C.G.D. does with regard to shipping. It guarantees a large number of loans on sales of British ships to overseas owners, but that gives those owners a considerable advantage. I understand that if a ship costs about £2 million, the net cost to the foreign owner at rates provided by Government legislation here might be £2¼ million, whereas the cost of the same ship to the British owner could be as much as £2¾ million—£¼ million more.
It is clear from the answers of the Minister of Technology on 17th January to Questions on the implementation of the Geddes Report that this matter is being examined closely, but it is a matter of some urgency. Until they can obtain credit on the same basis as foreign owners covered by E.C.G.D., the British owners, who make very great contributions to our export earnings, will be put in a less favourable position than their foreign competitors. Every day that we delay is likely to have an adverse effect in the long run on our balance of payments. I therefore ask the right hon. Gentleman not to give an answer now but to consider some way of speeding up the proposal.
We welcome the Measure and hope that it will lead to a very great improvement in British exports in the future.

2.55 p.m.

Mr. Arthur Blenkinsop: Like the hon. Member for Worthing (Mr. Higgins), I welcome the proposal and add my congratulations to all those who have been involved in the work of the Export Credits Guarantee Department and its very successful results. I also welcome the encouraging increase in our exports, which is to some extent a reason for the need to bring forward this Measure as soon is this.
I particularly want to take up the point with which the hon. Member for Worthing concluded, that is, the problems affecting shipping. There is very real concern about the anomalous situation that has arisen concerning British shipowners. While we all welcome the orders that the special facilities enable British shipyards to receive from foreign owners and would not wish to see anything done that would reduce the numbers of those orders from abroad, British shipowners are competing at a disadvantage. The figures quoted by the hon. Member seem to be realistic.
With the present competition for freight, firms attempting to get freight abroad for the benefit of our export earnings are placed in a very difficult position in competition with foreign owners who have the advantage of the special borrowing facilities we provide. It has been seen recently, rather to our sorrow, that a number of shipowners are placing orders abroad. It may well be that they do so because they cannot get the special credit facilities at home and are taking advantage of certain other facilities available abroad. There is the curious and anomalous situation that we are trying to encourage foreign shipowners to place orders in Britain and appear to be trying to encourage British ship owners to place orders abroad.
As it is clear that the earnings from British shipowners are very considerable and would outweigh, one would think, the advantages of the capital value of orders placed here from foreign sources, this is a matter of most urgent importance. I have an example of this anomaly from Tyneside, one of the major shipbuilding areas. The situation there is that on one side of the river a shipowning firm of the Stag Line placed an order with a large shipyard in my constituency in South Shields, Messrs. Redheads, for a cargo vessel, the value probably being between £1½ million and £2 million. The firm is now having to consider cancelling the order—the matter is still under discussion—because of this very factor. The firm is placed in this almost intolerable position by seeing its competitors abroad getting very considerable advantages in credit terms which are not available to it.
While I fully understand that the Government wish to consider this point


more widely in the terms of the Geddes Report and the whole question of reconstruction of British shipbuilding firms, I doubt very much whether we can wait that long. We have had information that the Minister responsible intends to bring in new legislation within a very short period. However, I would particularly ask my hon. Friend to see whether he can persuade the Minister responsible to make an announcement about this matter without any further delay, even in advance of the legislation which he intends to introduce.
I am by no means certain that the proposals that may be included in the legislation will fully cover the point that has been raised. I feel that it is of the utmost importance that, without any delay, we should have a declaration from the Government that credit facilities of comparable order to those being made available abroad will be made available to British shipowners, if necessary for a limited period, which I think would be understood, for one has to take account of the capacity of our shipyards and so on.
It is particularly unfortunate that at a time when we are doing our best to attract skilled workers back into our shipyards there should be danger of loss of orders for this reason which might set back for many years the very important new kind of security that we are trying to build up in our British yards so that we can improve delivery dates and do all the things that are so necessary to improve our competitive position in the world in this field.
I welcome this Measure because of the provision that it makes, but as our object is to increase our export earnings, I appeal to my hon. Friend to realise the close link between this matter and the question of British shipbuilding and to do his best to have an announcement made in the House without further delay.

3.2 p.m.

Sir George Sinclair: I join in the tributes paid to the conduct of the Export Credits Guarantee Department, especially over recent years, under the brilliant guidance of its advisory council, and especially in its discharge of its responsibilities under Section 1 of the Act.
However, it is not to that side of the Bill that I wish to address myself. I shall confine myself to the parts of Clause 1(2) that affect overseas aid; that is, the limitation of cover that applies also to the powers of the Export Credits Guarantee Department under Section 3 of the Act.
I know that aid has become somewhat unfashionable in many developed countries. The Government have recently cut our aid effort, and our official overseas aid—I give the O.E.C.D. figure—is running at 0·67 per cent. of our gross national product. The Bill by its cover for export, seeks to promote our overseas trade. The prospects of that trade in developing countries are greatly affected by our concurrent efforts in aid in those countries. And those countries are an important market now for our exports, and they will be an even more important market in the future. In spite of all the setbacks, about which we hear so much, their capacity to absorb overseas trade is increasing at an annual rate of 5 percent., according to the recent Report of the Ministry of Overseas Development. I am sure that the President of the Board of Trade still believes this. This is what he said in the House on 15th January, 1964:
In the course of visiting India and Pakistan last summer it was made clear to me how nowadays in exporting to the less developed countries trade follows aid. That has not been fully realised by many people. If anyone is inclined to doubt this, he should study another excellent F.B.I. report on the Indian economy. That shows convincingly that in the last six or seven years the proportion of aid to India from the United States and Germany has been rising while the proportion from the United Kingdom has been falling. The proportion of India's imports from the United States and Germany has been rising while the proportion of her imports from us has been falling. This throws a new light on a lot that has been said in recent years on the proportion of fall in our trade with the Commonwealth."—[OFFICIAL REPORT, 15th January, 1964; Vol. 687, c. 330.]
In spite of this clear belief in the value to our export trade of aid under Section 3, we learn today that the Government are to raise the limit under Section 2 by £200 million but do not intend that any of this limit shall apply to cover under Section 3, which is now to be held in abeyance. I wonder what action the Government propose to take to support the type of aid covered by Section 3 and which the present President of the


Board of Trade, three years ago, found such a valuable help to our overseas trade.
Since the Minister of State now asks for an increase in the limit of coverage under Section 2, he should, I believe, have taken this opportunity to give the House a great deal more information than he has about the record of the Guarantee Department in the recent discharge of its responsibility under Sections 2 and 3 for "rendering economic assistance to countries outside the United Kingdom".
It is doubtful whether the Department's powers have been used wisely in aid activities. In West Africa, for example, did they not go too far in guaranteeing a number of Government capital projects for which British companies were negotiating? Did they not find themselves guaranteeing a number of projects which have subsequently come to be regarded as absurdly wasteful and unlikely to make any important contribution to the economic development of those countries? Is the Department not now engaged in the difficult task of trying to secure the recovery of these loans? These are facts which the Minister of State should reveal to the House in winding up this function of the Guarantee Department.
These transactions were in the field of aid. Did the Guarantee Department consult the Ministry of Overseas Development closely on the details of these projects and their claim, within the development plans of these countries, to a high enough priority to merit the special kind of support that the Guarantee Department was offering? Did it get any backing from the Ministry for these actions? I hope that the Minister will shed some further light on the recent record of the Guarantee Department in the use of these funds.
When the Government attempted to make such great political capital from the development of the new Ministry of Overseas Development as the coordinator of all British efforts in aid and technical assistance, what arrangements did they make for the Guarantee Department to have close consultation with the new Ministry over its operations in the field of aid? Has there not been a lamentable lack of consultation, leading to a wasteful use of the Guarantee Department's support on many projects

of low economic value to the countries concerned?
When the Ministry of Overseas Development was developed by the present Government from the Technical Assistance Department founded by the Tory Government, I asked in the House whether the Government would be able to secure the full co-operation of other Departments whose powers were now to be taken over or affected by the new Ministry. I was given a jaunty assurance and told that the Government had given a high priority to this Ministry and had shown their determination by putting a Cabinet Minister in charge. What is now the Government's attitude towards this new Ministry? Its funds have been drastically cut. Its Minister is no longer in the Cabinet. Its annual report was slipped out at the beginning of the Recess when the House was given no chance of a prompt debate on it. Britain is now no longer the leader in ideas about overseas aid as it was in the 1964 Conference of U.N.C.T.A.D. What arrangements do the Government now propose to ensure that this Ministry remains the dominant voice in overseas aid policies?
I come to this general question of future consultation between E.C.G.D. and the Ministry of Overseas Development.
This affects not only the responsibilities of the Guarantee Department under Section 3, but the whole range of responsibilities for overseas trade.
I have already shown how important is this link between our aid and our trade in the developing countries. I realise that the responsibilities of the Guarantee Department for aid were completely insulated from the guidance of the distinguished Advisory Council. In effect, the aid side of the Guarantee Department has been a Treasury responsibility.
We have been told today that for the future the powers in Section 2 and Section 3 to deal with aid will be absorbed by the Ministry of Overseas Development. But the Government set up that Ministry many months ago. Why has there been all this delay in transferring this responsibility to it? I agree with the transfer. But why has there been the delay and why is the transfer now to be so incomplete?
These responsibilities for aid are alien to the other main functions of the


Guarantee Department. Why should they not now be transferred lock, stock and barrel, to the Ministry of Overseas Development? Should not the Bill have dealt with that issue? Should not the Government have done this at a time when they were enhancing the status of the Ministry and not left this action until today when they have just downgraded that Ministry and cut its scope?

3.14 p.m.

Mr. John Rankin: I join in the welcome which has been accorded by both sides of the House to the Minister on the way in which he has introduced the Bill and on what the Bill does. I agree with the increases and applaud the fact that the increased guarantees which we are making are proof of our increasing exports.
In keeping with what I have gathered to be the desire of certain quarters to shorten our speeches, I shall seek to make mine as short as possible in view of the importance of what I have to say. I hope that on the other side there will be some co-operation in making short speeches, too.
I want to draw my right hon. Friend's attention to one or two points about exports. Two or three years ago there was much agitation about increasing exports to Russia, China and to the near eastern countries in Europe. How are these exports progressing now? Are they doing well and what is the balance of payments in this connection? What has been happening with regard to China? Some years ago we were able to sell Viscount aircraft to China. Why has that kind of sale suddenly dropped away?
When we were selling those aircraft to China there was violent opposition from the United States, and every sort of device was used to prevent this trade. It was purely peaceful trading, no military aircraft were involved. Can my hon. Friend tell us why we have suddenly abandoned selling to China something which she wants—aircraft? China is a vast country and the use of aircraft is a great help to civil transport, as those of us who have been there are able to testify. Because of the great distances

involved an expansion of her aircraft services would be of immense value.
Why is it that trade with the European countries round and near the Black Sea seems to have lessened? In the course of his speech, my right hon. Friend referred to the possible sales of Concord. Last week, I had the opportunity of seeing Concord. By October, she will be in the flying shed and soon afterwards she will be making her proving flights. Her purchase options now amount to 70. That, at £7 million per aircraft represents £490 million worth of business.
These are big orders and mean big business. They are a most important asset to our export figures. The expectation is that after she has done her round-the-world flight the options will amount to something like 400. This is very big business, shared between France and Britain, and, I hope, a sign of better things to come. Is the Board of Trade estimate of possible sales in the region of the figures presented last week?
I read in The Times:
A British Government decision to give five years' credit to Cuba for the building of a £12 million fertiliser plant by the Simon-Carves Engineering Group will be disclosed soon, perhaps today.
I wonder why the Minister did not disclose it Is it too early? The Times tells us:
The Government's Export Credits Guarantee Department will back a £10 million credit arrangement; Cuba finding the other £2 million as a down-payment.
That is good news, and it means more exports, but we read in the next paragraph that we are doing this in face of hostility from Washington. I hope that when we poke our noses abroad, as happened in the Viscount sales and as appears to be happening on these possible Cuba sales, we shall not have them cut off by Washington, or, if it is to become the practice, then I hope that my right hon. Friend will tell our friends in America where they get off.
I said that I welcomed the Bill but that I also regretted omissions which have been regretted by two other hon. Members. The hon. Member for Worthing (Mr. Higgins) referred to the difficulties which face British shipbuilding. It is relevant to welcome what is in the Bill, and I have always understood that it was


equally in order, at least on Second Reading, to regret what was not in the Bill. So I endorse all that he said about the difficulty which faces the British shipbuilder. He gave the example of the difference in capital cost between a ship produced in a British shipbuilding yard for a British shipowner and one produced for an owner abroad. He gave the difference as £250,000. This is a considerable handicap in a market which is so highly competitive as is shipbuilding.
In addition to the capital cost, the British shipowner—and the shipbuilder, too—faces the fact that his competitor in world markets has laws which give him cargo preference in his carriage; operating subsidies and building subsidies. That is a very serious burden for the British shipbuilding industry to face. I hope that on this occasion at least we can call attention to this very serious situation facing British shipbuilding.
I speak particularly of two yards in my division, Fairfields, and Linthouse. Fairfields is a great experiment which is doing well—wonderfuly well in the circumstances. Fairfields is backed by the Government but, as the people told me last week, the yard is faced with the problem of getting orders on the world market. Part of the difficulty is precipitated by the handicaps we have been pointing out. How soon can we expect something definite to be done about all the recommendations in the Geddes Report? The onus was placed on the shipbuilding industry and I agree that its response has been a little slow. However, it is beginning to stir and I hope that the Minister will stir it up a little more.

3.25 p.m.

Mr. David Howell: I join hon. Members in welcoming this Measure and saying how encouraging it is to hear that the work of the Department has been steadily expanding. This is one of a series of Measures relating to the expansion of facilities through the Department introduced by successive Governments and it is clear that this is the right way to proceed.
We are, of course, talking about a very small aspect of a very large subject when considering the Bill. We are really talking about a particular side of export development against a serious export background. Exports have been doing quite well, but this is not the side of the

Bill or of export credit insurance that worries me. I am more worried about the type of topic raised by my hon. Friend the Member for Dorking (Sir G. Sinclair). Indeed, I find the whole question of Section 3 loans dismaying and I beg the Minister to clarify the position and the impact it will have on our development programme. The aid programme is at present being cut back, despite the hope that the trend would go the other way and despite the optimistic statements of Members of the Government. I hope that this whole matter will be made clear, for it is not made clear in the Bill.
But it is not so much the smaller aspects of the Bill as the broader questions of what part the Measure will play in the overall export strategy of the Government that are all-important. The Minister referred to both past and future trends of exports which should be taken into account when making changes and developing the policy of the Department. This must be considered in the light of many rather over-optimistic statements made by a number of Members of the Government in recent weeks, giving the impression that exports are doing better. Because this is an essential background point to examining the detail of the Bill, we should consider the facts of the export trend.
It immediately emerges that the long-term trend upward in the exports which this country needs if we are to get near to the overall growth rates and restoration of economic confidence we need has not come about, despite those optimistic statements by the Minister. For example, while last year exports rose in volume by about 4 per cent., the now defunct National Plan wanted them to rise at an average of 5¼ per cent. per year—this on the basis of some extremely optimistic assumptions about capital in-flows and out-flows and about the movement of imports during the growth period.
We are, therefore, in examining the Bill, looking at a background which is not at all favourable and which still leaves us a long way from the export figures and kind of export trends and policies we really need. In examining the Bill we must realise that we are still a very long way indeed from the vast increase in the competitive push needed behind our exports if we are to move into the high growth rates on which the


present Government's policy has been based and on which all our aspirations rest.
When we look at this Measure against that background, welcome as these things are, it is right to say, as leading commentators have said, that this side of it is tinkering with exports. I am afraid that that is so for two basic reasons. One is that however good export credit facilities are—and I go with the Minister in saying that probably at the moment, as a result of successive Measures and excellent Departmental work, our worldwide information services are good—we are facing a basic problem of profitability of exports. That problem is far greater than can be provided against by any insurance which can be provided in the short term. What we are facing is the problem of profitability in relation to the whole tax system.
While we spend time in debating these chicken-feed aspects of export promotion, the bigger issues will not get the attention which they deserve. The biggest one is a fundamental change in the tax system. That means, not moving towards the unhappy Selective Employment Tax which impinges on the paper work needed for export promotion and also enters into the cost of exports and forces them up, but in the direction of a much more imaginative type of export reform which many people hoped would come from this Government. We need to move to the kind of value-added tax, at any rate the kind of tax reform, which makes the percentage gained from a switch to exports very much greater than it is now and which the most developed and sophisticated credit insurance system could provide.
Secondly, this particular Measure is an excellent way for the Government, the Board of Trade and various Ministries to help exports, but it is of very little avail, and again in the chicken-feed category, unless it is backed up by much more serious attempts by the Government to throw their weight behind particular contracts and undertakings. We have had interesting examples of the way in which neighbouring countries—subscribers to the G.A.T.T. and within the spirit of the G.A.T.T.—have been able to ensure that deals go to their countries

by making quite clear that their exporters are fully backed by the strength of the Government and by making clear the possibility that if trade is not done with the country concerned and if contracts are not obtained there will be difficulties for the country concerned when it tries to sell exports the other way.
This seems to be a kind of help to exporters which again was expected from this Government but which has not developed, a direct backing of contracts and the throwing of weight behind the export efforts of particular salesmen. Those are two background considerations which must go with an examination of this kind of development and extension of the Department's facilities. I welcome them. They are right, but they are only a tiny part of what at present appears to be a non-existent strategy. Without far greater vigour and clarification of the Government's export strategy, they will be dished as they have been dished already every time they seek to expand the economy and go for the high growth rate which we want. They will run into balance of payments crises which so far we have not been able to avoid.

3.34 p.m.

Mr. Simon Wingfield Digby: I was delighted to hear the reference during this interesting debate to the shipbuilding industry. A feature of both sides of the House is that we share a common interest in the shipping and shipbuilding industry. It is disappointing that the opportunity has not been taken in the Bill to do something about the problems of the industry.
The hon. Member for Glasgow, Govan (Mr. Rankin) dealt with the vexed question of trade with the Iron Curtain countries. I must confess that I have some sympathy with him. I remember the problem of the sale of ships to Russia and the restrictions on speed which were imposed at the behest, I suppose, of the United States Government. Although I imagine that Cuba is perhaps not the best place to please our American allies, there comes a point when we have to beg to differ with them on trade questions, particularly when the trade balance is favourable, as it often is not with a lot of Iron Curtain countries.

Mr. Rankin: The hon. Gentleman is not, I hope, supporting any attempt by America to interfer in any trading arrangement we may have with Cuba?

Mr. Digby: I do not wish to get drawn into the question of Cuba; I do not know the facts of the situation. But it is not for the Americans or anyone else to dictate to us as to those with whom we can or cannot trade, because we have difficulties which the United States does not have in our trading relations and we have to trade where it is most profitable.
It is not easy to find new ideas about export promotion. So many of the bright ideas have fallen by the wayside. We are discussing a method of export promotion which has been surprisingly successful. It has been used and developed by succeeding Governments. It has nearly had its fiftieth birthday. The growth in these credits, even since the 1949 Act was passed, is quite staggering. I believe that 27 per cent. of our exports are covered.
I wish to apologise to the Minister of State. I was detained and I could not be present to hear his introductory remarks.
There is no doubt that this is a success story, but I hope that it will not blind the Government to the fact that many other things are needed. It is a very good thing that even on a Friday we should have the opportunity to discuss some of the problems of the export trade. It is sobering to read the grave figures about which we read yesterday showing the downward trend in production which has been going on since August. This makes it all the more important that the production that there is should be channelled into exports.
Those hon. Members who have travelled abroad in parliamentary delegations will have heard various stories about the credit difficulties which our exporters have had. I remember particularly complaints being received in Latin American countries, a part of the world where the population will double in 25 years, where there are many natural resources and where there appear to be great opportunities for our trade. Many examples were given us showing that even the work of this Department had not been sufficient to get contracts against foreign

competition. I know the exchange difficulties of most of the Latin American countries. On the other hand, perhaps this is one of the markets, apart from the European market, which has the greatest prospects; but in that respect it has some similarity with the trade with Iron Curtain countries to which the hon. Member for Govan referred.
I wish to say a few words about shipping. It is well known that the order book of many home yards, although it does not look too bad, contains contracts which are likely to be fulfilled only at a loss. Although it is very nice to get export orders, traditionally our yards have built largely for the home market. I would say nothing against the arrangement by which foreign shipowners can order in our yards on, I think, a 20 per cent. down payment and by which they on the rest. That is excellent.
However, our home yards depend on orders from the home owner, who is at a grave disadvantage. It has been shown that on a ship originally costing £2 million the difference between what the foreign owner and the home owner ordering here would pay is no less than £¼ million. Anyone who knows the small profit margins on which our shipping industry operates will realise that that is very serious. It is because of this that our home owners can be expected to order only in the market in which they can get the cheapest ships. The Government must not be surprised if people at home continue to place large orders abroad because they cannot afford to place them at home. It is true that even the £250,000 might not be the deciding factor. There are other things like delivery dates and the margin of cost which might be so great that the difference betwen getting credit at 5½ per cent. or 8 to 9 per cent. would not be a decisive factor.
But I believe the Government are wasting valuable time in this connection. Some time has elapsed since the Geddes Committee reported. I think most members of the Geddes Committee would agree that the situation has altered materially for the worse since they reported and that if the Report were to be written today they might diagnose the situation differently and their recommendations might be even more stringent than those which they actually made.
In fact, on the question of credit the Geddes Committee had something to say. It recommended that money should be made available for a period of three years but only for orders placed in certain yards. I would not have thought that went far enough in the present circumstances. I was delighted to hear a few days ago that the Minister of Technology is giving attention to this question of credits in our own shipyards for our own owners who are patriotic enough to continue ordering here even when in some ways it does not pay them to do so.
I believe there is very little time to be lost. I believe that representations from the Chamber of Shipping have already been received by the Board of Trade. I beg them to hurry up and not to give as an excuse later that they have not got a Bill in which they could put the necessary legislation. I hope that when the Minister replies he will be able to give some kind of assurance and give fresh hope to the shipbuilding industry which is in difficulties and is likely to be in further difficulties before the year is out.

Mr. Darling: I wish briefly to reply—

Mr. Deputy Speaker (Sir Eric Fletcher): Order. The right hon. Gentleman may only make a second speech in a Second Reading debate with the leave of the House.

Mr. Darling: That was going to be my next phrase, Mr. Deputy Speaker. I was going to say that I wish to reply briefly to the debate if I may have the permission of the House to do so.
The hon. Member for Worthing (Mr. Higgins) drew attention right away to the vital importance of exports, and that has been echoed by every speaker. I do not agree with him that S.E.T. has so increased the cost of paper work that it is difficult for people who are seeking cover from the Export Credits Guarantee Department who find this an expensive operation. That apart, I would agree that the whole story of this Department and its valuable work for exporters is a tribute to the accuracy of the Advisory Council's assessment of exporting risks.
I wish to reply briefly to the more important of the questions that have been raised. One of the first questions from

the hon. Member for Worthing concerned the small exporter, namely how far, through the Export Credits Guarantee Department, he can be helped. He also asked—at least, this was implicit in his questioning—why the guarantee premium is so much higher than the average rate under the comprehensive guarantees.
First of all, there is no low limit. The small exporter premium can be very small indeed. The small exporter guarantee arrangement is designed to introduce manufacturers—because many of the smaller men have not gone into the exporting business before—to credit insurance. It provides, therefore, a much simplified form of cover that is fair and more suitable to smaller firms than to the big and more elaborate exporters. It allows the policy holder to select which contracts he wishes to insure. Because the procedures are streamlined for the exporter, the Department has to bear higher administrative costs than the standard cover, and these have to be spread over a much smaller turnover if everything is kept within the small exporter arrangements. The small exporters' unlimited freedom to select risks which the big exporter does not have—the whole of his turnover has to be covered—means that losses are higher in relation to turnover under the small exporter guarantee. Although the rates are higher, the cover has run into a small loss. I have taken the point that this might be looked at again. This is something which the E.C.G.D. Advisory Council will keep under review.
Much as I would like to discuss them with the hon. Member, the interest rates for export finance are questions for my right hon. Friend the Chancellor of the Exchequer. As the hon. Member said, this is a very involved matter and, with his permission, I will not embark on it now.
The answer concerning guarantees for professional services is, "Yes". Special forms of cover are available under both Section 1 and Section 2. In addition, the Department gives support for professional services in the form of consultants for contracts that will earn foreign exchange, or where the consultants' activities will earn foreign exchange. Standard policies are available to cover earnings from invisible exports of this kind, where the consultant's services will be paid for


overseas. In addition, the Department is always ready to consider special needs in special cases, and to draft covers in appropriate forms, if this is possible without inconsistency with the commercial principles on which the Department is charged to operate.
The hon. Member wanted to know, as did the hon. Member for Dorking (Sir G. Sinclair), why the Bill does not mention Section 3. The Bill is a short one, and it says that the cover for Section 1 and Section 2 shall be increased. We could not very well go on to say in the Bill that we shall not do anything about Section 3. The explanation comes not in the Bill, but in the moving of the Second Reading, as is the case here.
The hon. Member for Dorking has, I think, misunderstood the relationship between the Export Credits Guarantee Department and the tied overseas development loans that were made available under Section 3. It is perfectly true that there are some substantial claims for payments due from West Africa—I do not think I should mention individual countries, as the hon. Member did not—mainly in respect of Section 1 guarantees for supplier credit contracts which were taken out years ago when some of these countries were not in such a serious position as they are today, when the business was acceptable to the E.C.G.D. Advisory Council and the liabilities were assumed under the previous Administration and before the Ministry of Overseas Development was set up. We believe that the bulk of these claims will be met.
The hon. Member drew far too gloomy a picture of this area of activity. It is right for him to say that trade follows aid. He went on to ask pertinently, after quoting my right hon. Friend, why Section 3 was being allowed to lapse. Aid of this type, which previously was given under Section 3, continues and has not stopped. As I have said, however, this is the responsibility of the Ministry of Overseas Development. The E.C.G.D. has never had responsibility for the allocation of aid but has only been the instrument of covering the aid arrangements.
To what extent the aid which is now being provided can be increased—this was one of the questions raised by the hon. Member—is a question for my

right hon. Friend the Minister for Overseas Development, who now has this matter under his control. The point is that now both the allocation and the administration of overseas aid are centred in one Department. This should meet some of the criticisms that the hon. Member has raised.
Before I come to shipbuilding, another question was raised by my hon. Friend the Member for Glasgow, Govan (Mr. Rankin) about trade with China and the Communist countries.

Mr. Rankin: Cuba.

Mr. Darling: I will come to Cuba presently. All E.C.G.D. facilities are available to this trade and we all are doing all we possibly can to increase it. Indeed, within recent weeks we have set up the Eastern Europe Export Council to do everything possible to stimulate this trade there. Any trade that we can do with China will be done, but I do not want at this stage to go into discussion about aircraft because I do not have the information with me.
With regard to Cuba, the Export Credits Guarantee Department has told the exporter concerned—that is, Simon Carves—that cover will be available for this contract. This is what we have today in this debate been calling Section 1 business. The business is acceptable to the Advisory Council as a risk. The Press will be told by the Advisory Council today. It will be in the papers.
Credit facilities for British shipowners to buy British ships are outside the scope of the Bill, as hon. Members who have raised the question will fully understand. The operative word in the Bill is "export". Looking at it from the narrow view of exports, everything that we can do to sell British ships abroad will have the full approval of this House. Therefore, in so far as we make the credit facilities and cover available, so much the better. What hon. Members are complaining about, however, is that British shipping lines which want to buy British ships do not get the same kind of credit assistance.
My right hon. Friend the Minister of Technology, who is now responsible for the shipbuilding side of things, said in an Answer this week that he is fully


aware of the situation and is considering the representations which have been made to him by shipbuilders about credit facilities in the light of the overriding need for the reorganisation of the industry. I do not take such a gloomy view as the hon. Member for Dorset, West (Mr. Wingfield Digby) about what will happen this year in shipbuilding, but I will see that my right hon. Friend is made aware of the criticisms and views that have been expressed today.
There are one or two other points—for instance, the question raised by the hon. Member for Worthing about leasing arrangements. If I have not replied to any of these special points, I will see that hon. Members are written to so that they can be covered.

Question put and agreed to.

Bill accordingly read a Second time.

Bill committed to a Committee of the whole House.—[Mr. Fitch.]

Committee upon Monday next.

EXPORT GUARANTEES [MONEY]

Queen's Recommendation having been signified,—

Resolved,

That, for the purposes of any Act of the present Session to raise the limits on the liabilities which may be undertaken by the Board of Trade in respect of guarantees under sections 1 and 2 of the Export Guarantees Act 1949 and certain other transactions under the Export Guarantees Acts 1949 to 1964, it is expedient to authorise any increase in the sums which, under section 3 or section 4 of the said Act of 1949, are to be or may be paid out of moneys provided by Parliament, charged on or issued out of the Consolidated Fund, raised by borrowing or paid into the Exchequer, being an increase attributable to provisions of the said Act of the present Session—

(a) raising to £2,400 million the limit imposed by the said section 1, as amended, in respect of guarantees under that section and related transactions;
(b) raising to £1,500 million the limit imposed by the said section 2, as amended, in respect of guarantees under that section and related transactions.—[Mr. Darling.]

INDUSTRIAL DEVELOPMENT (GRANT)

3.56 p.m.

The Minister of State, Board of Trade (Mr. George Darling): I beg to move,
That the Industrial Development (Variation of Rate of Grant) Order 1966 (S.I., 1966, No. 1569), dated 14th December 1966, a copy of which was laid before this House on 19th December, be approved.
I regret that the time factor compels us to bring the Order forward at this hour. It is exempted business, and I do not know what the weekend arrangements are, but I imagine that we could run on to Monday morning if any hon. Members wanted to take the debate on so long. However, I hope that as we shall have further opportunities to discuss the whole question of investment grants, industrial development and the rest, I need not be called upon to explain in great detail what the Order does. I know that the hon. Member for Worthing (Mr. Higgins) is fully aware of what it attempts to do.
It gives effect to the decision announced by my right hon. Friend the President of the Board of Trade on 1st December, 1966, to effect a temporary increase in the rates of investment grant. Part I of the Industrial Development Act, 1966. That enables the Board of Trade to make grants to firms in respect of approved capital investments in certain broad classes of assets, including plant or machinery, and in qualifying industrial processes such as manufacturing, mining and quarrying, construction and ship repair, or in scientific research, in computers, hovercraft ships and mining works. The standard rate of grant laid down in the Act is 20 per cent., but machinery or plant, mining works and some special categories of computers qualify for 40 per cent. if they are for use in development areas. It is the Government's intention that those should be the long-term rates for the investment grants scheme.
However, the Act provides power to vary the rates of grant by Order. While we intend to give industry a stable base for long-term investment plans, I think that it will be agreed that that provision in the Act gives a useful and very necessary flexibility when an extra stimulus to investment is required. The Order has therefore been made under that


power, and it came into effect on 30th December. Its effect is simple. It provides that in so far as expenditure on eligible assets is incurred between 1st January 1967 and 31st December 1968, the rate of grant will be increased by an extra 5 per cent. Expenditure which under the standard provisions in the Act would have qualified for 20 per cent. will now qualify for 25 per cent. and expenditure related to use in development areas will qualify for 45 per cent. instead of 40 per cent.
On the arrangements for this I need only say that, to attract the higher rate of grant, expenditure on eligible assets must be incurred between the two dates I have mentioned—the beginning of 1967 and the end of 1968. The Act provides that
expenditure shall be treated as incurred at the time when the sums of which it consists become payable.
That means that it will be impossible for anyone buying on hire purchase goods and equipment that qualify for the grant to make arrangements to pay ahead, when the payment really became due before 1st January, 1967.
I think that I need say no more about the effect of the Order, although if any questions are asked, with permission I shall do my best to answer them. The decision taken by the Government to increase the rates of grant over the next two years has been warmly welcomed by industry. At the recent meeting of the Industrial Economic Development Council, at which I was present, it was recognised that this was a very important step in promoting the objectives put forward at the first National Productivity Conference which was held in September.
It is not possible to say here and now what the precise effect will be. Hon. Members may have seen the reports yesterday and today of the latest survey of investment intentions, carried out by the Board of Trade. This suggests that firms, at the time the questions were asked, in November and December, were expecting a fall of about 10 per cent. in their investment in 1967 compared with 1966. This is not quite as gloomy as some forecasts which we had about the time the questions were being asked, and in any case some of the firms had already sent in their returns before the increases in grants were announced and

others have had very little time to alter their plans.
I agree that investment decisions depend on many factors apart from the level of Government assistance, and not all of them are under our immediate control, but the object in providing these higher grants is to give greater encouragement to firms to use the present opportunity to expand and modernise their plant. The Government, in effect, are sharing a larger part of the risk, in development areas almost half of it. The great advantage of the grant system is that the timing of the benefit does not depend upon future profits. We hope, and we have some confidence in believing, that firms will take full advantage of the increased grants and place their orders for plant and machinery now.

4.3 p.m.

Mr. Graham Page: I am sure that the contents of the Order are welcome to the House and to industry in general and that it is very necessary to provide this encouragement to investment at the present time.
It is not so much the content of the Order on which I wish to detain the House for a few moments as the timing and the form. It has become all too frequent for the Government to get Royal Assent to an Act and almost immediately to alter the Act by Order. We had this in the Prices and Incomes Act, when, on the very day of Royal Assent, a new Schedule was inserted in the Act by Order. We had the same thing in connection with building controls, when a vital figure in that Act was altered on the day that the Act took effect.
The present instance is not so bad, but nearly as bad. It is exactly four months to the day from this Act taking effect to the laying of the Order before the House. The Government ought to make up their mind what is the right rate when they pass a Bill of this sort. To alter the Act in this way may be very welcome to industry, but industrial people order their business in accordance with the statutes passed by the House and the Government ought to make up their mind to get the figure right at the start.
It is regrettable that the Order has had to come before the House before being considered by the Select Committee on


Statutory Instruments. I have endeavoured to discover to what it applies. The right hon. Gentleman explained it very adequately, but I am not sure that he explained the Order itself or what it says or does. To what does the Order apply? Article I says that it is
… in relation to any asset …
As a passing note, I would point out that the Oxford Dictionary does not recognise the word "asset" in the singular. It only gives "assets".
The Explanatory Note to the Order refers to
… certain expenditure on eligible business assets.
In an effort to discover what was meant by "eligible business assets", I thought I would find out from the Act itself and turned to the interpretation Section.
I found that, in that Section, "asset" includes
… any such works as are mentioned in Section 6 of this Act;
and that "business" is defined as including
… a trade or profession …
but not certain other things, like the local authorities, development corporations or univerisities. So the interpretation Section is not very much good in explaining to what the Order applies.
The Order applies to the provisions of Part I of the Act. So I searched Part I to try and find where the word "asset" appears. It appears only in Section 4, dealing with hired assets. It is true that the interpretation Section—Section 13—applies the word "asset" to mining equipment under Section 6. But these are the only two Sections to which the word "asset" applies according to the Act itself. So we come back to the words of Article I. The Order refers to amounts payable under Part I of the Act
… in relation to any asset to which …
a provision under Part I applies. Neither the Order itself nor the Explanatory Note says what assets.
Does the Order apply to machinery and plant under Section 1 of the Act? But nowhere in the Act is machinery and plan called an asset. Does it apply to Section 2, to computers, or to Section 3, dealing with new hover vehicles, or to Section 5 dealing with ships? This is a loose phrase to use in the Order.
The Order is to apply to "any asset" when the Act itself does not use the word "asset" as comprehensive of Part I and to describe, in the Explanatory Note, the Order as applying to "eligible business assets" when there is no definition of that phrase anywhere is very misleading to those who have to look at the Order and interpret it.

4.8 p.m.

Mr. Terence L. Higgins: I shall not detain the House for more than a few moments. I entirely endorse the remarks made by my right hon. Friend the Member for Crosby (Mr. Graham Page). It is very worrying that the Government should constantly revise their legislation at very short notice without the House having had an opportunity to debate the changes made. The Prices and Incomes Act was perhaps the worst instance, but this one is also unsatisfactory.
It may be said that the changes made by the Instrument will be regarded with pleasure by industry, but both industry and we regard the change as too little, too late and based on wrong principles. Constant changing of the rate of investment grant means that the uncertainty of the business climate is increased, which is not the kind of climate in which we are likely to get sensible investment decisions or an increase in the overall level of investment. Investment allowances are not a legitimate tool of short run demand management, and it is undesirable that this kind of Measure should be introduced.
I do not propose now to go into the basic points of difference between the two sides of the House on this issue. They turn on points which were raised in debates on the Industrial Development Act and Clauses 33 and 34 of the last Finance Bill, but the change now being made is typical of the indecision and the last-minute actions of the Government on both this matter and matters of economic affairs generally.
We are opposed to the principle of this kind of grant because we believe that the investment allowances are preferable and that this kind of cash grant is really a counsel of despair suggesting that British business is not capable of working out what an investment allowance of the tax kind is actually worth. I should have thought that if a firm could not work


it out, it was not the kind of firm which we wanted to encourage. Similarly we want to encourage profitable and not unprofitable firms and this kind of grant is not the way in which one is likely to do that.
Looking at today's Financial Times and the figures for unemployment in the region, one finds that in Scotland it is 4 per cent in the South-West 3½ per cent. and in Wales 4·3 per cent. and one realises what need there is to encourage investment in development districts. But at the same time the changes which the Order makes can only be regarded as pathetic, and this is true of investment in the country as a whole.
The right hon. Gentleman has referred to the forecasts of investment decreases. It is true that today's headline reads that the Board of Trade forecast a bigger fall in investment, about 10 per cent., which is not as great as the C.B.I. has forecast, but which, compared with the figure in the National Plan, gives the gravest cause for concern.
The dilemma of the present Government is that they cannot reinflate the economy by encouraging consumption, because that would simply get us back into an inflationary situation, and yet, unless they do that, they cannot hope to improve the market prospects for firms and encourage them to invest. They will certainly not do so in the present climate of opinion merely by trivial changes of the kind which we are now considering.
I want to turn to a technical point which is very important. What is crucial to the individual businessman reaching the kind of investment decision which the Order is supposed to influence, is the rate of return on capital and not the extent to which the grant reduces the amount of capital which he invests. I made this point to the Chancellor of the Exchequer in an intervention some months ago and he replied that I ought to put down a Question. I put down a Question, but it was answered by the Board of Trade, which was still talking about the absolute amount of capital and not the rate of return.
I hope that we shall have set out sensibly by the Board of Trade what the actual impact on the rate of return which a business receives is likely to be from

measures such as this Order. The fact is that in a development district the Order will increase the amount of grant from 40 to 45 per cent., but the effect on the amount of capital is very small and the effect on the actual rate of return is even smaller. I therefore hope that we shall have an explanation from the right hon. Gentleman—not now, because it is a complicated arithmetical matter—if we put down another Question to enable businessmen to appraise what this Order will do for their investment decisions.
I do not want to delay the House further, but it is important that we should place on the record the fact that we think that the actions which the Government are taking in this respect in the present economic situation to encourage investment are absolutely pathetic and that we hope that they will take other measures based on sounder principles of the kind which we on this side of the House have advocated and that they will at least spell out the actual implications of the measures which they are now taking.

Question put and agreed to.

Resolved,

That the Industrial Development (Variation of Rate of Grant) Order 1966 (S.I., 1966, No. 1569), dated 14th December 1966, a copy of which was laid before this House on 19th December, be approved.

CRIMINAL JUSTICE [MONEY] (No. 2)

Queen's Recommendation having been signified,—

The Minister of State, Home Office (Miss Alice Bacon): I beg to move,
That, for the purposes of any Act of the present Session to amend the law relating to the proceedings of criminal courts, it is expedient to authorise the payment out of moneys provided by Parliament of the expenses of any body established by or under that Act for the purpose of making decisions or recommendations with respect to the release on licence and recall of persons sentenced to imprisonment or other detention and the conditions of any such licence.
4.15 p.m.
The Government have put down this second and supplementary Resolution for the Criminal Justice Bill in response to the point raised by the right hon. and learned Gentleman the Member for


Warwick and Leamington (Sir J. Hobson), when the first Money Resolution was considered, on 13th December. The right hon. and learned Gentleman then asked whether that first Resolution would be sufficient to permit discussion in the Standing Committee of Amendments to set up a parole board to deal with the release on licence of prisoners, for which the Bill provides. Since then he has put down Amendments to this effect.
On considering the text of the Amendments, it is clear that a fresh Resolution is necessary, and we are, therefore, moving this Resolution today. I can confirm that this Resolution is wide enough to cover the right hon. and learned Gentleman's Amendments, but I must make it clear that the moving of this Resolution should not be taken as implying any change of view on the part of the Government about the appropriate procedure for licensing prisoners. As my right hon. Friend the Home Secretary said on Second Reading of the Bill, the Government will be glad to listen to the views of hon. Members on this issue. The Resolution is moved solely to enable the Amendments to be discussed in Standing Committee.

4.17 p.m.

Sir John Hobson: I had thought that we were to have the pleasure of being told by the Government that they had wholly accepted the proposals we had put forward and were willingly assisting us by putting down a Money Resolution. As we understand, they have not made up their mind and we hope that we will be able to persuade them.
I thank the hon. Lady for keeping a promise made by the Government when the Money Resolution was first moved.

Question put and agreed to.

DANGEROUS TOYS

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Fitch.]

4.18 p.m.

Mrs. Joyce Butler: I am very glad to have an opportunity of raising the subject of dangerous toys, which has been in the public eye for several months. A good number of organisations, such as the Consumer Council and the British Safety Council have considered this subject, and newspapers like the Sun and the Daily Mirror, and radio and television, have had programmes and articles illustrating what can happen when toys are not produced to a safety standard.
It is only right that we should have this opportunity of discussing the problem with the Department responsible for British-produced toys—the Home Department. I am very glad that my hon. Friend the Minister of State is to reply, because I know that she has a keen interest in the subject. There is no doubt that the majority of toy manufacturers are responsible people, producing toys as strong and as well-made as they can. However, in every trade and industry there are some who are not so responsible.
There is also the problem of the very large number of imported toys arriving into this country, particularly before Christmas, when the number of toys reaches flood proportions. It is extremely difficult for those who are buying toys to know whether they can rely upon them. This does not only apply to parents, who may perhaps have a little experience in this subject, but also to uncles and aunts, and very often to grandparents, who may have a number of grandchildren and only a limited amount of money to spend. They want something reasonably priced which will appeal to the child.
All too often when they buy the toys they find that they have something which is cheap, nasty and dangerous, and which, instead of giving pleasure to the child, may cause an accident. The majority of such accidents are caused through sharp edges and spikes on toys. Many of these toys are cheap, many of them are imported, and it is impossible to tell before


they are bought, and before the child handles them, whether they are dangerous.
I have taken the liberty of bringing with me this afternoon a golliwog which has had wide publicity; indeed, it is now a well-known golliwog. It looks attractive, although it is a bit dilapidated. But when I pull off the head it reveals that it was stuck on by a very sharp spike. I have quite a chamber of horrors of toys of this kind—dolls, animals and many other toys—where all the joints are held together by these sharp spikes.
It is in the very nature of children that, when they are playing with toys, they try to pull them apart. Indeed, there are many educationists who think that it is an essential part of a child's development—I suppose that we all did this—to try to find out how things are made by pulling them apart, and as the child becomes more developed, to put them together again.
It is impossible for those who are shopping for toys for children to know, when they buy, what are the contents of a toy. What are they to do? If there is no indication that the toy is safe and of a high standard, they cannot pull it to pieces in the shop to examine the stuffing and to see whether the edges are sharp. They have to take it on face value. There is a school of thought which believes that consumers should not be coddled, but should be able to judge for themselves, but I am sure that this school of thought does not extend to toys for children and that we all agree that it is the very antithesis of a child's play that he should be faced with danger from the plaything which he is handling.
Part of the difficulty is that we discover that a toy is dangerous only when an accident has already taken place. While I readily accept that the Home Office acts very quickly when a dangerous toy is drawn to its attention, this is often too late to prevent an accident from taking place. It is difficult to keep abreast of this kind of situation, and one of the things that we need is to try to isolate the relevant danger factors in toys. Some of them we know, many more we do not know, because until recently we have made no kind of study of the problem. I feel that something must be

done to obtain satisfactory standards for toys, and these can be based only on factual information.
I ask my right hon. Friend whether she can do anything in this respect to obtain this statistical information which would enable satisfactory standards to be provided by the British Standards Institution. I know that she is not responsible for it, but she may be able to have some influence on it, or she may be able to take action in some other way so that we may have indicated on the toys themselves whether they have reached an approved standard.
I very much welcome the new regulations which are to be introduced through the consumer protection legislation dealing with the level of lead in painted surfaces, for example, because it is an appalling fact that about 50 per cent. of the mentally retarded children in hospitals are found to have a high lead content in their blood—higher than normal. It is very worrying to think that some of them may have absorbed this lead into their blood through licking or sucking painted toys, or even plastic toys which have been made with a lead content. Unfortunately, although we have a lead standard, too often imported toys, in particular, have a higher lead content than they should have, and any tightening of this regulation is very welcome. I also welcome the regulations which are to cover the transformers of electric toys and the banning of celluloid toys, but many more regulations are needed.
Consider, for example, the types of stuffing used in stuffed toys, remembering that these toys are handled almost exclusively by very small children who can easily be affected by anything which is not hygienic. Unfortunately, the rag flock specifications which were introduced to cover this difficulty do not cover some of the modern forms of stuffing which are now being used, particularly in imported toys. They do not cover stuffing soft toys with plastic bags. A case reported in the newspapers just before Christmas showed that a child could pull the toy animal open, take out the plastic bags and easily be suffocated by placing them over its head. They do not cover powdered stuffings. Irritant powder stuffings have been found in toys.


We do not seem to have regulations to cover the type of spike in the golliwog which I have with me and in similar toys, or to cover the toy eyes of animals which are stuck on spikes and which can easily be pulled out. There are no regulations to cover cheap metal cars which can cut one's finger if one runs it along the edge of the toy. A child can obviously be cut more easily and more severely. We do not have regulations of universal application to cover high flammability in the coverings of toys and in costumes. The type of Batman's cape which flared up and which was then withdrawn was a typical example of this. There should be regulations to prevent such materials from coming into our shops. It is too late once the problem has been discovered.
Since Christmas a case has been reported of a soldier's uniform which was being worn by a girl aged 7 near her brother, who had a toy pistol which gave off a small spark when fired. In that case the spark ignited the uniform, which went up in flames. I am not suggesting that the regulations should state that all coverings should be completely non-flammable, because I realise that to achieve that would be difficult. However, they should state that these materials must not be highly inflammable.
Even if one leaves the more obvious toys and considers the educational toys, trouble arises. Some science kits are tremendously dangerous and the Observer reported a case of a science kit which contained a very badly made Bunsen burner with the instruction that a piece of rubber tubing, supplied with the kit but without any sort of connection, should be attached to the gas supply. Such an instruction is dangerous to a boy in his 'teens, let alone to a younger child. It is horrifying to think what would happen if anybody carried out that instruction.
It would be a great help if we had statistics of accidents which have occurred. When one raises this matter with toy manufacturers they tend to say, "There cannot be anything wrong because we have so far not had any reports of accidents from these toys". One of the problems is that if a child is hurt the mother is so busy binding up

the wound or giving other attention that she does not do anything about reporting the matter. Normally, she places the offending toy in the dustbin and forgets all about it. Indeed, often she does not know to whom the matter should be reported. The public should be encouraged to report any accidents of this kind, at least to their local town halls—usually they know where they are—so that the information can be passed on to the appropriate authority and reported to the manufacturer, if he is known.
The Royal Society for the Prevention of Accidents is trying to collect information about accidents of this kind. If the Minister can help in any way by supplying information which her Department may have it would take us a step further towards making toys safer. If this information were given to the British Association of Toy Manufacturers, in regard to home-produced toys, and the Society of Factors and Importers, in regard to imported toys, they would have to do something about making the toys they make or import more safe.
Another difficulty at Government level is that responsibility is divided among a number of Departments. My right hon. Friend may well say that she has no responsibility for imported toys because imports are primarily the responsibility of the Board of Trade. It may be that she will not say that because she extends her responsibility for toys as far as possible, but there are difficulties here. There is the difficulty about enforcement of regulations by local authorities which come under the Ministry of Housing and Local Government. I ask her whether she can facilitate to the furthest possible extent collaboration between Departments so that we can have one approach to the problem of dangerous toys.
The immediate crisis which arose just before Christmas with so many toys on sale is now over, but, according to my calculations, there are still only 265 shopping days to next Christmas and soon the flood of toys coming to the shops will begin again, because Christmas orders start very soon in the spring for the next season. Parents are asking who will protect their children from danger when they go shopping. The consumer bodies have done a great deal, but they have other responsibilities. Educationists can see what is wrong, but they have


very little time. Parents too often have very little knowledge. The Home Office and my right hon. Friend herself have other very big responsibilities. Manufacturers are mainly concerned in production and importers are concerned in the same way.
It seems that it would be desirable to have a Toys Council, representing all these interests and doctors also, sitting as a permanent body to look at the points I have mentioned, and at many others which may arise, and to give some kind of guidance on the matter. Obviously, they could not deal with every single toy which is produced, but they would have the sole responsibility of seeing that our toys are made more safe. There is a Toys Council in Canada. There may be similar bodies in other countries. I wonder whether my right hon. Friend could obtain any information which would be useful in this respect to this country.
One of the problems is that the nature of toys is always changing. The other day I saw a small boy with a piece of string tied to a stick whipping at a little wooden top. It was such a strange sight that a crowd of older people had gathered to watch him. This was a very common sight years ago, but now wooden tops, hoops and skipping ropes have disappeared, and there is a whole range of toys on sale based on television topics. Three years ago anyone who predicted that the Daleks then first appearing on television would come into the shops would have been laughed to scorn. I do not think that 12 months ago anyone could have foreseen the great demand for Batman capes by children this Christmas.
We need a body whose sole responsibility it would be to watch all these new developments, to make sure that when manufacturers rush out new toys to meet changing demands they do so with materials which are safe and where they are producing toys composed of many parts, particularly toys for small children, the parts shall be as safe as the whole, free from spikes, cutting edges and substances which could injure the children who play with them. Obviously, we cannot make this a perfectly safe world. It would be undesirable for children if we did so. They have to learn to take knocks and to deal with all kinds of things which

are not pleasant, but we should ensure that this kind of danger is removed as far as possible.
I hope very much that my right hon. Friend will be able to give us some assurance on these points.

4.35 p.m.

The Minister of State, Home Office (Miss Alice Bacon): I thank my hon. Friend the Member for Wood Green (Mrs. Joyce Butler) for raising this matter and for giving me an opportunity, in the time available, to give an account of what is being done at the Home Office about this very important subject. My hon. Friend came with other of my hon. Friend's on a deputation to me a short time ago about dangerous toys. I am pleased to say that, having spent some time at the Home Office, the deputation expressed appreciation of what was being done about this matter.
In her speech, my hon. Friend recognised that, although this is an important subject, it is not always very easy to deal with. She recognised some of the difficulties—for instance, of dealing with every type of toy when toys are changing all the time, and difficulties of definition. Among the risks most frequently brought to our attention are toys which are inflammable, toys which are electrically unsafe, toys with sharp edges or readily exposed points, soft toys with unhygienic fillings and readily detachable eyes and toys coated with harmful paint.
These and all the other risks were considered very thoroughly by the Molony Committee on Consumer Protection which came to the conclusion that, while regulations were required to give statutory support to some of the recommendations in the British Standard Code, this was neither necessary nor practicable in the case of others.
There are three ways in which we at the Home Office try to make toys safer: first, by legislation, by regulation; secondly, by getting manufacturers and importers to agree to recognise standards; thirdly, by direct action when an unsafe toy is on sale.
Following the Molony Committee's recommendations, regulations are now being prepared which will prohibit the sale of toys manufactured from celluloid; require electrical toys to be operated only at low voltage; and prescribe safety requirements


for transformers and control units for use with such toys. The opportunity will also be taken to restrict the amount of lead and certain other toxic substances which may be present in the paint used on toys. The preparation of these regulations has taken much longer than we expected. The original draft was ready for circulation some time ago, but was delayed by our decision to include requirements relating to paint, which produced many technical difficulties. For example, the very low limits proposed for certain of the toxic substances in paint produced serious problems of analysis. These obviously had to be overcome in such a way as to ensure that the limits were practicable for the trade and were capable of being enforced. However, our final proposals have now been circulated to the trade and I hope that the Regulations will be laid very soon.
Although the Regulations have been in the course of preparation for some time, it would be wrong to assume that children have been at risk during this period. The use of celluloid in the manufacture of toys was discontinued voluntarily by manufacturers some time ago.
The Molony Committee came to the conclusion that in some cases regulations would be impracticable for other risks. It would be difficult to define in regulations, for example, how sharp a point or edge should be before it constituted a serious danger. I can visualise the discussions which would take place in the House or in any Committee which considered that. For regulations the definition has to be precise and it is very difficult to define a dangerous toy, but we all know one when we see it. But in other cases the Committee thought that the risk was too small to justify statutory controls. The code is at present being reviewed by the Technical Committee of the British Standards Institution concerned with the safety of toys and we shall certainly consider the possibility of extending the scope of the initial regulations once the revised British standard has been published.
A great deal is done through the British Standards Code of Safety. Safety standards for toys are set out in the British Standard Code of Safety Requirements for Children's Toys, published by the

British Standards Institution. We believe that the majority of toy manufacturers and importers recognise this code, and it is an essential part of our policy constantly to remind the trade of the importance of complying with safety requirements.
The numbers and varieties of toys are now so great, and designs can change so rapidly, that we must obviously look to the trade to act responsibly and with good sense in manufacturing and marketing their various products, We know, for example, that many importers now include in their contracts, when placing orders with overseas suppliers, a clause to the effect that the toys supplied must comply with the British Standards code.
Another feature of our policy is to try to deal with any particular toy thought to offer a serious danger, which is brought to our notice. If we find on investigation that a complaint is justified, we invite the manufacturer or importer concerned to put matters right. In general, the trade is very ready to co-operate.
I can assure my hon. Friend that we have already taken action in some of the cases that she has raised today. The golliwog that she produced was of Japanese origin. We have already been in touch with the importers who have been in touch with the makers, and we are assured that none of these are now coming into the country. I would hope that none are on sale at the present time. I do not know when my hon. Friend bought this particular toy, but we are assured that it is being dealt with.
With regard to plastic bags, we saw the account of the filling of toys with plastic bags and we approached the manufacturer. We found that this firm used plastic bags which are shredded but that, owing to a very regrettable mistake on the part of one of the workpeople, they had not been shredded for use in this particular toy and had been put in whole.
We have taken action with regard to inflammable Batman capes, liquid-filled toy feeding bottles and a toy dog, which one firm had on sale, with metal legs which were readily exposed and with eyes which were insecurely fixed. These were withdrawn from sale. There was a golliwog with insecurely-fixed eyes, and again this toy has been withdrawn. There was a toy locomotive, manufactured in Hong Kong, which had sharp edges. We


reported this matter to the Hong Kong Government office which immediately took steps to stop further shipments to this country. There are these soft toys with sharp metal points, and here again we have approached the manufacturers in Japan. There was a hanging monkey which was recently being sold, the plastic face of which could easily be pulled off, exposing sharp pins which had been used to secure the face in position. We obtained the withdrawal of this, too, and there are many other cases illustrating where we took action, which I could mention if I had time.
I know that it may be said that this kind of action is locking the stable door after the horse has bolted, but, as my hon. Friend realises, it is not always possible to anticipate the hazards which may arise with new kinds of toys which may be introduced. As my hon. Friend said, we had not heard of Batman until fairly recently, let alone Batman's capes. We have dealt with this, but we will see if more can be done to deal with other outer clothing.
My hon. Friend asked some specific questions about imported toys. We at the Home Office are not responsible for imported toys but when we make regulations they will apply at point of sale and, therefore, will include imported toys as well as those manufactured in this country. We do not have figures for accidents caused by toys for which my hon. Friend asked because, unless accidents are serious, they are not reported to us. All I can say is that we have not had brought to our notice many serious accidents as a result of toys.
My hon. Friend also asked about the setting up of a Toys Council. This is an interesting proposal which is to be discussed at a meeting in March

arranged by the Consumer Council. The proposed scope of the Toys Council as explained by the Research Institute for Consumer Affairs would extend beyond safety and would include research into such matters as the kind of toys suitable for children of various ages. This is an interesting proposal and it is being considered.
Our approach to the problem can, therefore, be summarised as follows. Regulations are being prepared following the recommendations of the Molony Committee. Official support is given to the British Standards code. We deal at once with individual cases of dangerous toys which are brought to our notice and we shall consider the need for further regulations when revision of the British Standard code, at present in progress, is being completed.
I hope that I have shown that much is being done in a number of different ways to deal with the problems which we have been discussing today. We are by no means complacent, however, and we shall be reviewing the need for further statutory controls once the revised British Standards code for safety requirements for children's toys is ready.
Whatever action is taken by central and local government, safety associations and the trade, I must, however, emphasise that parents also have a responsibilty to exercise proper care in choosing toys for their children. Excellent advice on this matter is contained in a special pamphlet on buying toys—

The Question having been proposed after Four o'clock and the debate having continued for half an hour, Mr. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.

Adjourned at Thirteen minutes to Five o'clock.